If you’ve only recently started trading, it can be difficult to identify the subliminal habits that constitute your trading strategy. Navigating your trades without a clear idea of what does and doesn’t work for you means you are, in a sense, trading blindly.

To help clarify their day trading tools and practices, many traders use day trading journal software or templates to bolster their trading success. Journaling successes and losses is one of the more common day trading tools as it allows traders to track their performance and manage risk.

Ultimately, a trader can use their journal as a way of measuring how they’re doing and what they could do differently.

A trading journal can also help traders prepare for new market conditions and risk factors by measuring progress and planning for the future.

What is a Trading Journal?

What is a day trading journal? A trading journal is a means to track trading performance. It is one of the essential trading tools for any trader, as it is difficult to identify whether you are performing if you don’t measure your performance.

A trader’s journal is used to bolster trading success. It helps a trader understand their emotions and how they affect trading decisions.

When you trade live in the market you don’t have time to reflect on what is happening. It can be difficult to notice certain mistakes without making a concerted effort to track your strategies and their results. A trading journal seeks to rectify this problem.

Your trading journal may also provide notes on why you didn’t trade a particular session.

There are many ways to keep a trading journal. Some traders use Excel or Google Sheets, others might use software designed for trading journals.

You could even keep notes using a pen and paper if you wanted to. However, one of the benefits of using a spreadsheet or software is that you can quickly calculate figures. For example, if you wanted to know the average size of your winning trades, your day trading journal software can easily supply you with your answer.

Benefits of a Day Trading Journal

There are a number of benefits to keeping a trading journal. These range from understanding and refining your trading, to controlling emotion and discipline.

Below are some of the major benefits of keeping a trading journal:

1. A Day Trading Journal Will Help You Develop Your Strategy

If you don’t reflect on your trading, then you won’t know what works and what doesn’t.

Finding trades with the best success rate, allows you to focus on and refine your strategy and monitor its development.

You might think a particular type of trade is most successful when in fact there are better setups that are already working for you.

By finding out which parts of your strategy work, you can build on the skills associated with them. Understanding what’s not working will help you eliminate any weaknesses.

If you find which parts of your strategy work you can build on that skill. Understanding what’s not working will help you eliminate those weaknesses.

This will help you build a stronger trading strategy with fewer weak points. You make your decisions based on data, not your opinion which may be biased or just wrong.

2. A Trade Journal Will Help You Measure Your Strategy

Along the same lines, a trading journal helps you measure how well your trading strategies work.

You will be able to put percentages and dollar figures to your performance, and compare results in an organised layout.

This can tell you whether you’re meeting your trading goals. You can track this performance along your journey to visualise your improvement.

3. A Day Trading Journal Will Define Your Strengths and Weaknesses

No two traders are alike and we all have our own strengths and weaknesses. It’s important to recognise those strengths and weaknesses and actively tailor your strategies around them.

Using your trading journal, you will be able to identify patterns. You’ll notice what leads to your winners and to your losses.

Is there a particular area you need to work on? What strengths should you be focusing on? Do you need to drop something from your strategy entirely?

4. A Day Trading Journal Will Help You Build Discipline

You should already know the rules of your trading strategy and be able to identify when you do the wrong thing.

Being truthful and committing mistakes to a trading journal will force you to acknowledge those mistakes.

This is your chance to analyse why you made that mistake and what you should have done differently.

5. A Day Trading Journal Will Keep You Accountable

Be honest with yourself and think about what you did wrong in a trading session. This will ensure you are aware of your mistakes and help you own and rectify those mistakes.

When you consistently review your trades, all of your mistakes and rule breakings are on display. If you’re honest with yourself, you have nowhere to hide from them.

It’s especially important to ensure you follow the rules of your trading strategy. If you identify that you have broken a rule, note the emotion that caused you to break it.

6. A Day Trading Journal Will Help Control Your Emotions

A trading journal isn’t just a place for statistics. It’s also used to understand your emotions and the thought processes behind your decisions.

Looking at why you made a mistake is as important as identifying that you made it. If you don’t know the reasons for your mistakes, it is difficult to eliminate them from your behaviour. Verbalising your emotions allows you to objectively recognise them, which in turn will allow you to assess whether they are positive or negative in their nature.

Consider the following examples to note:

7. A Day Trading Journal Will Improve Risk Management

A risk management system in trading is highly important. Risk management is often the difference between being profitable or not.

A trading journal will help you understand what risk you put into the market and what reward you reap.

If you notice an imbalance between what you are risking and what you are making, then you know you have a problem.

Calculate your average winners and losers and ensure the winners are larger. Doing this makes it easier to become a profitable trader.

Adjust your risk if necessary, so that you take smaller positions. It’s important to note that without a trading journal you might not recognise when you have larger losses than winners.

How to Create a Day Trading Journal Template

At the end of this article you will find a link to your free day trading journal template to get you started.

This is an example of how I would lay out a trading journal, but everyone is different. It’s a good idea to also know how to make one from scratch, even if you already have access to day trading journal software.

Your trading journal may be different based on the type of trading you do (day trading vs swing trading) or the markets you trade.

The reason to use a spreadsheet or specialised software is that they provide calculations. You want to be able to store your data but also quantify certain things.

There are many different ways to create a day trading journal, but the main things to note are the following:

Free Day Trading Journal Template

To get you started with creating your own trading journal you can download our trading journal template.

Feel free to add, remove, or change any of the contents of the trading journal to fit your trading.

Even if it does not match your trading style entirely, this template should at least provide you with a good starting point for creating your own trading journal.

download your free trading journal template

Tips for Using Your Day Trading Journal

Identify common factors for winning trades

A day trading journal isn’t a doom and gloom tool used to point out your mistakes. Look at the things you are doing well as well as the things you are not.

Is there a certain trading pattern that you have a high success rate trading? Focus on finding that set up.

Congratulate yourself on what you are doing right

Identify common factors for losing trades

If you’re noticing similarities in your losing trades, that’s good. It will be easier to work on eliminating those factors.

There are a few things that you can consider when thinking about your losses:

Create summarised information (key statistics)

It’s useful to create a sort of ‘dashboard’ with a high overview of important information.

Rather than trawl through entries of data, it’s nice to get quick figures. You might want to know your average winner and average loser for example.

If you have months’ worth of data in your journal it will be very difficult to find quick answers to certain statistics.

Day Trading Journal – Bottom Line

One of the first things beginner traders should do when learning to trade is to organise their day trading journal.

It’s likely that a beginner is learning more than one or two stock patterns or set up and they need to know which works best for them.

A trading journal is a must if you want to understand the context of your trading, and how you’re actually performing.

To summarise, you use a trading journal to:

  • Log your trading activity
  • Develop and test different trading plans/strategies
  • Pinpoint strengths and weaknesses in your trading
  • Develop discipline
  • Understand your emotions and psychology of trading
  • Track and improve risk management

Want more insights into how to better develop day trading strategies as a beginner? or how to trade Futures, consider signing up to one of our day trading courses, designed to provide beginner traders with the tools and strategies they need to start their trading portfolio on a strong note.

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