eToro – Forex Trading Forum

[djsheckie]

Sure journalling can be annoying, but when starting out it's the best way to see where you're going right, or more importantly wrong. So, what exactly is important to track in trading journal?

Record the general market conditions on the days you trade. I.e. -Is the market volatile, is it high, low, or trending?

What time and at what price did you enter the trade?

The time and price when you exited the trade and also why decided to exit the trade.

Any changes in the market while you were trading.

Any money managament techiniques you used. i.e.- stop loss, take profit, etc.

It might also help to get a screen shot the chart from the time you were trading into the journal for reference.

Any other factors that seem important, or worth recording.

Hopefully this will help you sort out what's working and what isn't so you can trade smarter, and earn more pips.

[djsheckie]

So you have a trading journal. Now what? The purpose of keeping a trading journal is to have a point of reference for which trades are and aren’t working. With careful review you should be able to improve on your gains, and avoid some losses. Of course even the best traders lose sometimes but hopefully through this analysis you can work out what is and isn’t successful for you and how you can further refine your trading methodology.

So what should you look for in your trading journal?

Take note of the number of long and short trades you’ve made. This can be checked against the market to see if I’m trading with the current or against it.

Check the number of trades you’re making to see if perhaps you’re overtrading.

[djsheckie]

Also important to note is your number of winning and losing trades. When things are going well it means that you’ll see more winning trades than losing ones and you should also see a healthy margin of profit. However, when you see more losses over a longer term (because there may be a few short slumps), you’ll need to re-evaluate your trades as well as your methodology.

It’s also important to note the amount of time that you hold trades. Why? See if you can find a pattern whether you do better with short term trades, long term trades, or something in between see what’s working for you. Moving beyond that comfort level by cutting trades short or going for in for the long haul may not work for you if you’re accustomed to a different method.

[djsheckie]

Monitor the time you spend holding losing and winning trades. Why? It’s far more difficult to make money by holding on to losers for an extended period. Rather cut your losses early, and move on. Generally, when you hold a losing position the losses gain steam and can end up greater than the winners. So, even if you have more winning trades than losing ones you can still end up in the red.

Also check your profits and losses in the context of the length of the trade as well as market conditions. This should help you further pinpoint the conditions that lead to your success and failure. In this way you can learn whether breakout movements or ranges work better for you, or whether I’m doing better when you buy or sell. Obviously if you seem to excel in one over the other you can make improvements based on that.

Finally it’s worth noting both the average profit vs. average loss on your successful and unsuccessful trades.

[djsheckie]

So, this is slghtly off the topic of trading journals, but I thought it might also be worthwhile while starting a trading journal to start a trading plan. Any successful business has a solid business plan, and if you want to build you'd like to be succesful trading you'll also need to have a plan. This includes setting reasonable benchmarks to meet along the way, and monitoring your progress and making any neccesary changes as you go.

When it comes to having a plan trading isn't so different from other businesses in that it's important to have a written business plan that you can and will stick to.

So, what should be included in a business plan? Below you'll find some suggestions that should get you started on a successful business plan.

[djsheckie]

Here are the basic questions your plan should include, and that you'll need to answer before getting started:

Why do you want to start trading FOREX?

What are you looking to gain, and if you're mainly interested in making money then try to pin down a goal amount and list any plans you have for that money.

What makes you different than other traders who fail?

What are your greatest strengths and weaknesses and how will the help or hurt you as a trader?

FOREX is a 24 hour market. How much time do plan to spend following it, and how will this affect your day to day life?

Are you planning to be a day trader, swing trader, etc.?

What times do you plan do trade?

When are you going to do your daily research and for how long?

What criteria have you set for entering a trade?

[djsheckie]

What criteria have you set for exiting a trade?

Do you have a money management strategy, and what is it?

What indicators will let you know that your strategy isn't working?

If your strategy isn't working how will you address the problem?

How much money do you plan to invest?

If you need to add more money how much will you add and where will the extra capital come from?

If your trading is succesful will you withdraw some of the money, if so what amount would you withdraw, and at what point would you withdraw it?

When considering your taxes, living expenses and other costs can you afford your initial trading balance, and will your trading support you if you're doing it full time?

How long do you think it will be before you're profitable?

These are really more basic questions and you can feel free to add to them as you deem necessary. The more you plan your entry into trading the more likely you are to be successful.

Good luck and happy trading :)