By Joe Duarte

One of the most impactful, high‐leveraged activities you can adopt is to keep track of all your trading activities in a trading journal. Doing so tracks your experiences in the market, helps you process and carefully analyze them while also keeping them in a permanent place, and then allows you to return to those journal entries at a later time to learn from your past experiences.

When kept right, your trading journal becomes an invaluable reference manual that can help you recall both what you’ve done right and what you’ve done wrong in the past, thus keeping you on the right track moving forward and preventing the same mistakes again in the future. A trading journal can help you analyze your trades and trading systems to determine which aspects of trading you do well and which ones you need to work on.

When you develop a trading system, save ideas and test results in your journal. When you enter a position, record everything about the trade. Include your thoughts as you contemplate making the trade. When you have a what‐was‐I‐thinking moment later on, you can find the answer in your journal.

Using a loose‐leaf binder to hold your trading journal is probably best. Print before and after charts for each trade and include them in the journal. Keep detailed notes about each trade and about the system you used to trigger the trade. At a minimum, your notes need to include the following:

  • Trade date
  • Stock symbol
  • Number of shares and why you chose that number
  • Whether you bought long or sold short
  • Which system triggered the entry signal
  • Which system triggered the exit signal
  • Where you placed your initial stops
  • If and why you moved your stops
  • What caused you to exit the position and why
  • The percentage gain or loss from the trade
  • Whether any economic reports or announcements were made around or during the time of the trade
  • Your thoughts, hopes, and fears that you had before opening the position and while the position was open

You can also use your journal to keep track of more than just your trading history. Save Internet articles or blogs that influenced your thinking. Cut out and archive the new high and new low lists from the newspaper. Keep a record showing leading and lagging industries. Save sector charts along with your trade records. Whatever information you use to make trading decisions needs to be in your trading journal.

You can improve only the things that you measure. Record statistics about your trades. Include the duration of each trade, the MFE, and the MAE. After you close a trade, write down what you could have done differently. Find out whether you can identify signals that can help you recognize similar situations in future trades.

Although keeping the journal is important, it’s useful only when you review it regularly. Spend a little time every week or month reviewing all your trades so you can pinpoint consistent mistakes or missed opportunities. Be brutally honest with yourself and use your journal as an opportunity to step back, take a cold, hard look at your trading decisions, and evaluate how you can improve moving forward. Every trader, no matter how experienced, always has room to grow. Your trading journal should become the soil that nurtures that growth.