When you first start in Forex trading probably the last thing on your mind is keeping a Forex trading journal. After all this is an extra step in your already busy Forex trading day. The fact is that keeping a Forex trading journal will help you to become a more profitable trader.
One of the first things that comes to mind when many beginning traders think of a Forex trading journal is that it might have a negative impact on their trading. The main reason for this type of thinking is that in the trading journal your recording winning as well as losing trades. Inexperienced traders don’t often realize exactly how important losing trades are. By recording your losing trades you are giving yourself the opportunity to continually evaluate your Forex trading and learn from your mistakes. This does not mean that just because you have a losing trade that you made a mistake. Losing trades are a part of Forex trading and losing trades can be the end result of a good Forex trader executing a good Forex trading system.
Recording your trades in your trading journal gives you of the opportunity to know what happened rather than try to guess what happened during a particular trading day. Studying a trading loss on a particular day can provide you with invaluable insight that can help you to improve your Forex trading system and your trading overall. For instance, you may refer to your journal and notice that a large percentage of your losing trades are happening during periods of extreme market volatility. This is extremely valuable information and further research may dictate that you filter your trades during periods of extreme market volatility.
Based upon what we’ve looked at so far you can clearly see the value of keeping a Forex trading journal. Let’s take a look at some of the things we would like to list in our Forex trading journal:
Date and time — The trading day as well as the time you’re making the entry into your journal.
Currency pair traded — Here you will list the currency pair your trading such as the euro dollar US dollar.
Entry price and time — List your actual entry price as well as the entry price dictated by your Forex trading system.
Exit price and time — List your actual exit price as well as the exit price dictated by your system…if there is one.
Name of broker — The name of a Forex broker you’re using for this trade.
Reason for entering the trade — This could be as simple as writing, “I entered the trade based upon my XYZ trading system”.
How you were feeling — A few words about your mental and physical state during the trade.
Additional notes — List any additional information that you feel may be pertinent. You can list such items as the economic reports that came out on that particular day or your own notes on the general state of the market.
The list we’ve just covered is by no means comprehensive, but it is an excellent start for your Forex trading journal. Your journal can be in any number of formats such as one created by your word processor, a journal in Microsoft Excel, or a physical notebook where you write in your entries during the trading day.
Remember that your Forex trading journal shouldn’t be viewed as an extra task that has to bog you down, but rather as an educational experience to further your growth as a successful Forex trader.
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