Unless you love recording data or your job as an accountant – record keeping may be the most boring part in running any business. It is however, one of the most essential elements since it allows the business owner to analyse the various transactions and improve them to deliver the desired results. The absence of records will keep you guessing where things went wrong and what should be done to improve the situation. As any serious trader will tell you, trading is like running your own business. So, if you are trading online, it is prudent to keep a detailed record of all your transactions so you have a full picture of what happened.
A diary of all actions can help traders analyse their strategy, besides aiding in remedial action or a revision of the strategy. The reality, however, is that very few traders record and review their trades because many platforms automatically keep records for them. Unfortunately, often not in enough detail which is why keeping your own diary of online forex trades may be very key to your success.
For traders who engage in multiple transactions in a month or a week, it is difficult to keep track of all transactions and their outcomes. Maintaining an online trading diary ensures that they do not miss out any transaction. Again, maintaining a record will ensure that we can compare the actual transaction with our desired motive and discover the cause of deviation, if any. An easy way is to keep a screenshot of all trades in a day with personal comments placed on the chart itself. However, a proper and systematic record of the screenshots is also essential.
Keeping a proper record of transactions ensures that traders work in a methodological way and can plan out the investment of their funds in the best possible manner. Random and impulsive trading can be restricted if a trader is aware of their investment limits and available funds. Absence of records may make the trader exceed their limits and invest a larger amount than they had already planned to.
Several traders avoid maintaining an online trading journal because they believe it to be a boring or, in some cases, too cumbersome and complicated procedure. But, even a simple record of entries with their details is adequate to keep one’s trading transparent and methodical. Let’s look at the things that need to be mentioned in the diary to develop and implement successful trading.
A forex trader’s online trading diary should include details like the date of entry and exit of a trade, stop loss or profit targets, trade size and the result. Apart from this information, trade entry and exit comments provide great insight into the feelings and motives of the trader and their outcome on the trade.
Maintaining an online trading diary helps traders review their trade decisions, the motives behind them and outcomes, which in turn can help them continuously improve on their trading strategies. In contrast, the absence of diary may make traders continue with their mistakes and incur losses or enter into unprofitable trades. But this does not mean that a trader gets so involved in maintaining the diary that they actually miss out on trading opportunities. Devoting a few minutes each day to record that day’s transactions will go a long way in improving the overall trading experience.
The Blackwell Trading Diary (powered by Chasing Returns) is an advanced tool that works like a trading diary but it goes even further in analysing the trader’s psychology. It can show how much time you spend on your winning trades versus your losing trades, the percentage of winners and losers and the actual profitability of your trading. The tool gives you information about your trading behaviour so you can look at what refinements you may need to make to increase your trading success.
If you liked this educational article please consult our Risk Disclosure Notice before starting to trade. Trading leveraged products involves a high level of risk. You may lose more than your invested capital.