Keeping a Trading Diary. Is it necessary

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Forex Trading Journal Excel Template

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Forex Trading Journal Excel Template

Are you looking for a Forex Trading Journal Excel Template? You found it, and you can download it for free!

This is our template:

Forex Trading Journal Excel Template: the chart

As you can see, it provides a lot of useful information such as the Average Trade and the Average risk-reward ratio.

The only thing you will have to do is to enter the trades you have executed and the relevant result.

With our Forex Trading Journal Excel Template, you can finally keep track of your every trade.

You can improve by reviewing your trades and understand what your real statistics are.

But now let’s see better why it is so useful.

The best way to improve in trading is to keep a trading diary.

It is like a paper diary, but above all in spreadsheets where we record the trades that we performed during the day.

Because if it is true that in trading, every situation is always unique, it is also true that similar cases repeated constantly.

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By reviewing your trades, you can learn a lot because you can draw many fundamental indications.

Remember: We learn from our mistakes.

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Why You Need the Forex Trading Journal Excel Template

Having a diary allows you to record the trades and be able to review them, thus pushing you to think about the trades and don’t forget about them.

It is, therefore, essential to take time every day to review your trades and try to analyze if there are errors or recurring positive factors to try to eliminate the former and strengthen the latter.

To build a trading journal, it is relatively simple for anyone with necessary computer skills to create a worksheet in Excel: the columns will contain the categories, while the rows will contain the trades.

Forex Trading Journal Excel Template: Position size calculator

The essential items that a trading diary must have are:

  1. Date
  2. Trade opening time
  3. Currency pair
  4. Long / Short
  5. Entry price
  6. Stop loss
  7. Target
  8. Closing price
  9. Gain / Loss (in pips)
  10. Notes

This will eventually allow you to find the trades in the chart and go to review them.

In the notes, it is important to be brief, but to write critical comments such as emotions at the time of opening the trade, the reasons for opening, closing, obstacles, doubts, etc.).

Here are some questions that the diary can answer:

  • Winning percentage of the strategy.

An idea of the success rate of our system can be useful to calculate the size of the position and estimate the profit targets

  • Average stop-loss amplitude.

Helps determine the optimal size of positions to meet money management criteria

  • Times of the day more profitable.

Depending on the answer, we may decide not to trade at a particular time of the day or try to strive to improve in that period, where perhaps the trading conditions are different.

  • Short or Long?

Are Shorts or Longs usually more profitable? How much? We could only look for short or long entries or investigate the reasons for any difference in performance

  • Preferred currency pairs

Each currency moves differently from the others; some couples respect more technical levels others less. Any couples are more volatile; some continue in lasting trends; others tend to consolidate.

Do I get good results in EUR / USD but not in GBP / USD? This information can help us better select which couples we can trade better with our style.

We could choose to abandon the less productive couples or try to improve the results on those.

  • Do you come out of time?

We may find that we tend to come in too early, and waiting for an extra candle, we may get better results.

  • Prices to the target?

We may tend to close positions prematurely, but the diary tells us that prices on average tend to reach the target we set ourselves.

  • Recurring patterns

Especially with the help of the screenshots, it can be noticed that a particular price formation brings positive or negative results consistently. The next time we see a similar pattern, we will know how to behave.

Conclusion Forex Trading Journal Excel Spreadsheet

These are some ideas; there are dozens of other questions that a journal can help answer.

With this, I do not want to tell you to analyze the trades more than necessary because then we fall back to the opposite problem, the so-called analysis paralysis (the psychological block due to excessive analyzes).

However, a successful trader is methodical, tries, experiments, studies, verifies; if something works, it is held; otherwise it is set aside.

However, this cannot be done by sensation, but it takes statistical proof to prove it. Only in this way will the trader make effective decisions aimed at improving his technique and, consequently, his performance.

Forex Trading Journal Excel Template: the chart

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Keeping a Trading Diary. Is it necessary?

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In this post, our aim is to stress the importance of keeping a trading journal:

  • How did I lose $50 on that trade last week?
  • Did I take a $100 profit yesterday because I held the stock longer or was there another reason?
  • How did I miss that short squeeze the other day?

Chances are that you have asked yourself at least one of these questions, regardless of how long you have been trading stocks. It doesn’t matter whether you started trading last week, last year or five years ago.

Trading is a constant learning curve. The more insight you have into what went wrong and what went right with every single trade, every single day, the more you’re learning about the market, catalysts and your trading personality.

The more insight you have into yourself and into your trades, the more experienced a trader you can become.

Trading is not encapsulated by the notion of making money overnight, by speculating, by a random pick on a small-priced stock that will make you into a millionaire with little thought, no planning and no understanding.

Rather, the successful trading journey is a long-term affair that comes only after careful planning, studying, learning from other successful traders, learning from your mistakes—with money being the reward for what should be your well-informed trading decisions.

If you learned anything in school, it’s that note-taking is an important step towards learning. Someone who is in-the-know disseminates information, the student takes notes. The student uses those notes and then practices.

The student inevitably will have some failures.

Scientists—true pioneers who are trying to find a solution to a problem, or a cure or proving a theory, take great notes. They record everything. Scientists who fail to document their failures and successes in minute detail are not scientists at all—they are speculators who are unlikely to uncover what they intend to uncover.

This is why we stress just how important it is to keep a trading journal to record, track and review every trade that you make—the good, the bad and the ugly.

Keeping a detailed diary helps you to learn from your trades, will help you keep your goals in the forefront of you mind and will help to tweak and perfect your strategy.

Ultimately, a trading journal helps you to grow as a trader, revealing insights that you can use in your future trades.

So, when should you start your trading journal?

We think it’s critical to start your trading journal from Day 1 of your trading career—even if you’re only paper trading. If you’re among those who has already started to log all of your trades, well done!

You’ve already taken a very important step forward on the road to mastering your trading skills.

So, how do you go about keeping a trading journal?

That’s a great question and one that varies depending on who you are. You should have an open mind about how to journal your trading activity. But, if you’re a new trader and having worked with lots of newbies before, we suggest taking cues from already successful traders.

You can tweak it later and make changes, as you become more comfortable with the process.

It’s okay to keep your trading log the way you like it and find most useful—for you. If you want to keep your own diary using pen and paper, that’s fine. If you fancy spreadsheets or something even more high tech, go ahead, log your trades in there.

If you think other traders could give you more insights, use one of the many journaling programs out there. What matters is to keep a trading journal for every move that you make (or even every trade you choose not to make), because it offers several crucial advantages for improving your knowledge and skills.

Here’s our breakdown of the 5 advantages of keeping a trading diary.

5 Reasons To Keep A Trading Journal

#1 Track every trade

Provide detailed information into trading earnings and losses.

When you have the date/hour of entry, timeframe, the move you made, size of your positions, reasons for opening/closing trades and the outcome: profit or loss, this is what we consider to be a detailed account of what you did with your trade.

It’s not necessary to write/spell it all out in full structured and grammatically correct sentences (although that’s fine too!). It’s enough to record a few words and numbers or just list the bullet points. This saves time when live trade journaling.

#2 Review every trade

Journaling is great. But, it’s fairly pointless if you never review your journal to glean insights from your previous trades.

This review process will shed more light on what was right or wrong with your choices and trading strategy. And, we assume you have a strategy, rather than the fly-by-night approach, which is akin to gambling.

Your strategy, even if it doesn’t work, should be methodical and you should stick to it until you’ve proven that it’s the strategy that’s faulty. It’s okay to change your strategy. It’s not okay to not have one.

Reviewing every trade will help you to tweak your strategy and will assist you as you try out multiple strategies.

  • Have you written in your journal your reasoning for opening or closing a trade?
  • Have you written in your journal why you didn’t make a specific trade?
  • Have you written down your thought process behind each decision?
  • Did you include details, like price at purchase, price at exit, dates and times of execution?

If you do, you should always be reviewing this information to see if you were right to act on some catalyst, news or chart.

If you don’t have a reason (whether it’s right or not) for entering/exiting aposition, you probably shouldn’t have been in the trade at all.

#3 Learn from every trade

The more you review your trades and ask yourself what you should do differently next time, the more you will learn—and the more quickly you will learn. This is yet another advantage of keeping a trading journal.

By recording your trades, thoughts and market observations, you are actually learning from your past actions and mistakes. When you report and flag a past mistake, you can write down what you can do next time to avoid repeating that mistake.

Or, when you see what is working and successful, you can focus on learning what’s profitable for your strategy and goals.

People who are willing to improve their skills and knowledge find a lesson to learn and a chance to grow from each experience—good and bad. So, let each of your trades teach you something.

#4 Grow from every trade

Our take of this advantage is that a detailed trading journal enhances your trading discipline, helps you to keep track of your trading strategy, monitor your profit-taking goals and evaluate longer-term risk-vs-reward opportunities.

The trading diary keeps track of not only each of your trades, but it also keeps tabs on the progress you’re making toward reaching your goals or on your individual trading type.

The trading journal is an investment in your continuous education in trading and self-discovery.

#5 Keep everything in perspective

The more you find out about markets and about yourself, the better big-picture view you will have about the whole process. Records of past trades, what went wrong or want went right and what you want to change next time, make it easier for you to adjust to new market trends.

Keeping the journal and reviewing it regularly gives you insights into what kind of trader you are. It also shows you what trades or stocks work for you and your ultimate trading goal. Then, you can see how to apply what works for you to your future trades.

A bonus advantage—and it may be one of the most important and yet underrated advantages, is that journaling often helps you close out what happened during the trading day—mentally speaking.

If you acknowledge your losses, write them down and write down what you should have done (and therefore what you will do next time), you can be done with it and enjoy the evening and sleep better.

If you try to bury your head in the sand, losses—especially large ones—can leave your mind spinning for hours, vacillating between briefly stressing out over what went wrong and what we call the ostrich effect, which is like refusing to address what is concerning to you.

If you journal your trades and detail everything about the good and bad trades, you are properly dealing with your loss, treating it more like a business transaction. Then, you can move on with the rest of your day, already having a plan for the next day.

Not journaling may leave issues unresolved, which will nag at you, whether conscious or subconscious and will interfere with your general happiness.

There is no need to reinvent the wheel here and there’s no reason to trudge off on your own, ignoring those great traders who find journaling an absolute necessity. At first, it may seem a daunting task and time consuming.

But, if you give it a shot, you will come to the same conclusion any successful trader has already come to: journaling works. Ignore this advice at your peril.

Remember: practice makes perfect. With time and experience, you’ll see that your trading journal is your best companion in your journey to becoming a better and more successful trader.

If you’re new to trading stocks we’ve got 15 steps for getting you started, check it out.

4 Reasons You Need a Diary for Both Good and Bad Forex Trades

You may wonder why it is necessary to keep a separate trading journal since just about every broker provides a real-time record of your trades. In fact, one could argue that the broker’s record also keeps track of available buying power, margin usage, and profit and losses for each trade made. Still, there are benefits to keeping a separate trading journal, and here is why.

Historical Record

Over a period of time, the journal will provide a historical perspective. Not only will it summarize all your trades, but it will provide, at a glance, the state of your trading account. In other words, it becomes your personal performance database, which will provide you with the opportunity to go back in time and determine how often you traded, how successful each trade was, which currency pairs performed better for you, and even what time frames gave up the best profit percentages.

Planning Tool

Not only should a good trade journal record your actual trade data, but it should also provide information on what your plans are for each trade. This feature allows you to consider each trade before you take it by setting parameters for where you want to enter, how much risk you can accept on the trade, where your profit target will be set, and how you will manage the trade as it proceeds. In other words, the journal becomes a way for you to record your thoughts in actual numbers and makes it possible to convert wishful thinking into practical reality. It forms the basis of a method for planning your trade and then trading your plan.

Methodology Verification

Another very important by-product of a trading journal is the fact that, over time, it will verify your methodology. You will be able to see just how well your system performs in changing market conditions. It will answer questions like: How did my system perform in a trending market, a range-bound market, different time frames, and the impact of your trading decisions such as placing stop-loss orders, too tight or too loose? In order to retain the full details for the logic behind a particular methodology, the trading journal must be fully comprehensive.

Mind Pattern Modification

One of the most useful features of your journal will be the concrete help it provides in forcing you to change your habits from destructive to constructive. As you learn how to trade your plan, you will develop a greater level of confidence. Your profitable trades won’t feel so random, and your losses will be “planned for,” and therefore won’t ding your psyche in a way that will make you feel that a loss means you are a loser. A very important mental and emotional factor in trading is your level of confidence. Confidence is the antidote for the fear and greed cycle in which many traders will get caught. Fear and greed is a natural, hardwired response in most humans. If you are winning, you want to win more; if you are losing, you feel fear and even panic as your account dwindles toward zero.

Having a journal that gathers your statistics sets up a trading plan by defining parameters of action needed, provides a rearview mirror so that you can measure how well you executed each trade, and most importantly, provides you with the feedback to develop and evolve your trading skills. You will find a good trading journal to be a best friend and mentor as you make progress. (Market hours for Tokyo, London, and New York determine volatility peaks. Find out how in The Forex Three-Session System.)

The Two-Part Journal

It is recommended to set up a trade journal that accomplishes two main concepts:

  • A chronological columnar list of trades you can total and aggregate so you can have a record of all your efforts. This is best accomplished by handwriting in the columns all the pertinent data. Of course, you can keep records using an Excel spreadsheet that can automatically do the math for you, and which will remove simple calculation errors. This depends on your own abilities in spreadsheet modeling.
  • A printout of the actual chart you used to determine the trade, indicating your entry level, your stop-loss level, and your potential profit level should be clearly marked up on the chart. Mark the reasons you made the trade on the bottom.

Finally, you should set up a journal for each type of trading methodology or system you employ. Do not mix systems, as the results of your trades will derive from too many variables and will then be inconclusive. Therefore, if you have more than one trading system or methodology, you should keep a journal for each one.

Every trade you record should be based on only one particular system, which will then give you the ability after 20 trades or so to calculate the expectancy or reliability of your system.

Here is the expectancy formula:

Example: If you made 10 trades, and six of them were winning trades, four losing, your percentage win ratio would be 6/10, or 60%. If your six trades made $2,400, then your average win would be $2,400/6 = $400. If your losses were $1,200, then your average loss would be $1,200/4 = $300. Apply these results to the formula and you get:

or 40%. A positive 40% expectancy means that your system will return you an additional 40 cents over every dollar in the long term.

The Bottom Line

Once you know your system’s expectancy, you can act with confidence. Confidence is the key to execution. If you lack confidence you will not be able to execute your trades according to your plans and you will either second-guess yourself or become paralyzed from too much analysis of data coming in from the market. Make a trading journal your first trading habit. It will become the key to all your good trades in the future.

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