What Is a Trading Journal: What Data Should You Analyze?

I find it necessary to interrupt down your trading journal by picking apart this key data:

• Screenshot comparisons
• Your PnL and RR profitability
• Mistakes you make
• Where you stray out of your trading plan
• Your emotions throughout the trade process
• Post-trade information
• Missed trade opportunities and why

Let’s discuss each in greater detail and see what you’ll be able to gain from each.

Screenshot Evaluation

Incorrect evaluation

You would possibly see times when your first guess a few price range was unsuitable, which caused you to make bad trading decisions.

For instance, you realize that a support or resistance level you identified was actually barely lower or higher than you first thought…

Being aware of this might help improve your analytical skills and be more careful when searching for key trading zones.

Best Setups

Comparing winning and losing trades through screenshot evaluation can reveal patterns or differences in your trade setups.

Fastidiously examine the formations of candles and price motion leading as much as your entry point for each winning and losing trades…

Try to be searching for any similarities or distinct features within the setups of your winning trades that were absent in your losing trades.

This type of evaluation helps you learn how one can successfully enter trades.

As at all times, it will be significant to be certain that that this evaluation has a big enough sample size to be reliable.

Avoid making hasty adjustments to your trading strategy based on single instances of success or failure!

Analyzing your PnL and Size of Losers vs. Winners

Analyzing your Profit and Loss (PnL) could seem easy, but there’s more to it than simply calculating your win rate.

I want you to know that Win Rate, in lots of cases, doesn’t mean all that much….

“Hang on Rayner… how can it not matter if you happen to usually are not winning?!”

Well, win Rate by itself doesn’t at all times mean Profitability.

You must consider whether you make more in your winning trades than you lose in your losing trades.

Let me show you…

Trading Results Table:

OK, so here’s a small sample size of seven trades.

Even with a low win rate of 28%, a give attention to risk management and maximizing profits on winning trades can still yield positive results…

In this instance, with a $10,000 trading account and a 2% risk per trade, you could be up $560!

While this scenario might not be sustainable with such a small sample size, it highlights the importance of prioritizing the standard of trades over their quantity.

Analyzing your PnL data lets you discover patterns, akin to losing streaks or the necessity to reduce losses, that are key to refining and enhancing your trading system.

Identifying and Eliminating Trading Mistakes

Early in my trading journey, I spotted the importance of reducing the variety of mistakes I make.

Each mistake chips away at profitability, whether it’s a minor error or a significant setback.

Nonetheless, making mistakes is a component of the training process, and it’s okay to confess them.

What I learned from experience is the worth of specializing in only one or two mistakes at a time…

As a substitute of attempting to fix the whole lot without delay, I spend the following month fixing those one or two.

For instance, if I see that I consistently trade an excessive amount of or don’t follow my risk management rules, that’s what I take a look at.

In this fashion, I can work on making the proper trading habits a component of my every day life.

After that, I take care of the following set of problems.

This gradual approach allows me to make meaningful progress without feeling overwhelmed or spreading myself too thin.

Over time, this method has proven effective in helping me refine my trading process and turn into more consistently profitable!

Analyzing When You Didn’t Follow Your Trading Plan

Serious about times whenever you didn’t keep on with your trading plan can assist you to understand the way you make decisions.

Try and determine the actual reasons on your actions…

Did your feelings get in the way in which of your rational considering, causing you to stray from the plan? 

Take a step back and truthfully assess whether you’re sabotaging your system!

By recognizing these moments and trying to find the basis cause, you’ll be able to develop ways to stop similar behavior in the longer term – becoming a greater trader in consequence.

Track Emotions throughout the Trade, not only Before and After

On longer timeframes, huge market movements can occur as trades play out – playing in your emotions as they do.

It’s possible you’ll feel tempted to shut trades early, either for a small profit or attributable to slight drawdowns.

These feelings can have a giant effect on the way you make decisions and result in bad trading results.

That’s why it’s necessary to trace your emotions not only before and after the trade but additionally during.

Consider making quick notes about your emotions and thoughts because the trade progresses, but don’t act on them immediately.

This approach lets you see your feelings within the open, without letting them get in the way in which of your trading system.

It might assist you to stay disciplined and follow your trading plan, which can ultimately improve your trading overall.

Potentially Analyze what happened After you Exited

Analyzing your trades a couple of days after you’ve exited them is strongly advisable.

Why?

Firstly, once a while has passed, your emotions turn into detached from the trade.

It means you get a transparent, realistic assessment of the trade’s actual performance.

Secondly, this evaluation permits you to see if any areas of your trading strategy could possibly be higher.

As an example, if you happen to review ten trades and find that in eight of them, the worth continued within the direction of your trade after you exited…

…it pretty strongly suggests that your exit strategy could have room for improvement!

Armed with this approach, you would possibly adjust your profit-taking, even perhaps letting your winners run further before exiting.

Missed Trading Opportunities

Listing these opportunities in your trading journal is one other invaluable practice.

When you discover a missed entry trigger, take into consideration what was happening on the time.

Were you unavailable attributable to personal commitments?

Or did you just miss the chance? (it happens)

Learning concerning the reasons you missed trades can assist you to improve your process and make higher use of your time.

It might assist you to discover whether your strategy is true across different pairs and timeframes.

Serious about why you missed these trades can even assist you to determine deeper problems like fear, doubt, or laziness.

You possibly can give you ways to take care of these issues and be more disciplined in following your trading plan.

Ultimately, it’s the motivation that serves you, reminding you the way necessary it’s to remain alert and disciplined when trading.