Wednesday, May 16, 2007

How to Keep a Trading Journal: Trader Perspectives

When it comes to climbing the learning curve of trading, few tools have proven as helpful to traders as journals. Properly constructed, a journal can be a device for goal setting and identifying strengths and weaknesses. Here are some worthwhile perspectives on keeping journals from trader/bloggers:
  • Joey Fundora, from the Downtown Trader site, offers an excellent account of how journals can aid in the cultivation of a trading edge. He explains how he utilizes the journal feature within the StockTickr program to create a forward evaluation of his trading. He makes effective use of tags to categorize his trades, enabling him to quickly identify the types of trades and markets that are working best for him. Great article.
  • Trader Mike tracks his trades with a spreadsheet and offers the spreadsheet as a free download. He follows his P/L as a function of dollars risked and leaves a column for comments about each trade. This enables him to identify specific circumstances--in the market and in his trading--that were operative in the trade. Helpful tool.
  • Here's a post from Charles Kirk, summarizing Doug Hirschhorn's trading journal checklist. He includes 15 items, such as news and economic events for the day, the trader's game plans, and self-evaluation. This is useful as an integration of trading and trading psychology.
  • In this article from my personal site, I provide a summary of trading journal features that have worked best for the traders I've known. I stress the use of the journal to learn from good trades as well as bad ones, and the role of the journal in preparing for the upcoming trading day. I also identify specific metrics worth tracking to improve your trading.
  • Here's another take on journals from Downtown Trader. He makes effective use of the "R" statistic in his journal and outlines several ways of improving the bottom line.
In the end, trading journals are like exercise equipment: they only produce results if you work them regularly. The best journals, I find, don't make the collection of information burdensome and focus on concrete goals for improvement. All of us are most likely to keep learning if we keep the learning fun.


The Most Important Psychological Skill for Traders