Tracking Failure and Success: 7 Reasons Why You Should Keep a Trading Journal

Tracking Failure and Success: 7 Reasons Why You Should Keep a Trading Journal

Success is every trader’s goal, but failing also comes with benefits. So, it’s best to keep track of both. One way to track your failures and successes is to keep a trading journal, which can be a helpful tool in the long run.

A trading journal is an app or a trading tool that allows traders to record the data of their trading journey. However, it doesn’t end there. As you log your trading history you should find time to review and assess them. In this article, we’ll discuss further reasons why you should keep a trading journal.

1. Learning from Mistakes

Keeping a trading journal can help you track and learn from your mistakes whether you’re a beginner or a professional trader. By logging in your mistakes, you can see and analyse if a pattern affects your decision-making process.

In addition, you can also determine if you’re making impulsive decisions or sticking out to your trading plans. Aside from the mistakes, you can also identify the right things you do whenever you win a trade.

Once you know the mistakes and good things you do, you can improve your risk management strategies. For instance, if you already know how to trade shares, you should try to learn to trade other assets to diversify your portfolio.

2. Analysing Performance

Identifying your strengths and weaknesses is another reason why you should keep a trading journal. As mentioned, if you’re consistent with your trading strategies, it’s possible to find a pattern. This pattern can help you understand whether you’re doing great or there’s something wrong with the way you trade.

For instance, if you've been trading for a year now, you might be surprised by your improvements. When you look at your trading journal, you can easily find when did you start improving as a trader. Additionally, it’s also a great reminder if you don’t improve at all.

3. Tracking Emotions

Trading can trigger various emotions, and keeping a trading journal is one way to regulate emotions. As you know, emotions can often cloud your judgement and let you forget about your plans. A loss can trigger selfishness or revenge trading even if you already know how to trade shares and other financial instruments.

So, while keeping tabs on your trading journey, you should also log your emotions depending on what’s happening. For instance, if the market goes in a different direction than the position you opened, you should know if you’re sad, angry, or frustrated during that time. As you record your emotions, you can be self-aware and be able to make sound decisions.

4. Enhancing Discipline

Keeping a trading journal can be a daunting task at first. However, as you continue recording your trading results, you won’t find it complicated to log them anymore. Once you’re used to recording your trading journey, it can enhance your discipline to follow more of your trading plans.

For instance, if you’re having trouble following your trading plan, analysing your past trades allows you to point out the benefits of sticking to your plan and avoiding impulsive trading. So, aside from regulating your emotions, you can use your trading journal to enhance your discipline.

5. Setting Clear Goals

What are your trading goals? Setting your goals as a trader allows you to do things in an orderly manner. Unfortunately, without goals, you’ll find it hard to focus and perform better.

If you’re a beginner, avoid setting too many expectations. You can start by creating a trading plan and follow it. Once you do, assess whether you made the right plan or not. From there, you can improve your performance, and create a better strategy that you can use as you move forward. Fortunately, with a trading journal, you can significantly improve your targets and create better strategies.

6. Building Confidence

Looking at the bright side, having a record of all your success in a trading journal can build your confidence as a trader. When you feel like all the things you’ve tried for the past few days didn’t work, you should check the time when you often win.

Besides, wallowing with your losses can cause doubt, that you’re not good enough, and fear that gains are far from your reach. So, instead of feeling down, this can be a great opportunity to regroup and look out for the helpful ideas you can get when you often achieve your goals.

7. Refining Strategies

Whether your trading strategies are working well or not, you should still find time to adapt to the changes in the market. If your trading strategies evolve as much as the financial markets, it’ll be easier to spot the mistakes you’ve made or the improvements you should apply to your trades.

If you have a trading journal, it’s easier to refine your strategies since you can access your trading history along with some personal notes.

Final Thoughts

Maintaining a trading journal isn’t a simple recommendation, but a necessity for traders. Even if you think you have a solid trading plan, there are times when the market goes against your analysis. So, if you have a complete record of your trading journey, it’s easier to make the necessary corrections to your plans that can help achieve your goals.


Aliana Baraquio has over 5 years of experience as a writer and market analyst. She specializes in developing beginner-friendly trading techniques and tutorials. Additionally, she suggests FP Markets as the top broker for trading CFDs and Forex.