Journaling and trade tracking are essential practices in day trading for several reasons:
Self-Awareness
- Emotional Triggers: Journaling helps you identify emotions that affect your trading decisions, like fear or overconfidence.
- Strengths and Weaknesses: Tracking trades allows you to pinpoint what you’re good at and where you need improvement.
Strategy Refinement
- Performance Analysis: By keeping a record, you can analyze which strategies are profitable and which aren’t.
- Trend Identification: Over time, you might notice patterns in your successful and unsuccessful trades, helping you adapt your strategies.
Risk Management
- Position Sizing: A journal can help you understand how your position sizes relate to your success rates.
- Stop-Loss Effectiveness: You can evaluate how effective your stop-loss levels are and adjust them as needed.
Accountability
- Decision Justification: Writing down the rationale for each trade makes you more accountable.
- Discipline: The act of journaling encourages a disciplined approach, making you stick to your trading plan.
Learning from Mistakes
- Error Identification: A detailed journal can help you identify mistakes you might not have noticed in real-time.
- Course Correction: By recognizing your errors, you can take immediate steps to correct them, reducing the likelihood of repetition.
What to Track
- Entry and Exit Points: The price levels at which you entered and exited the trade.
- Trade Date and Time: When the trade occurred.
- Position Size: The amount of capital invested in the trade.
- Strategy Used: What strategy you employed for that particular trade.
- Emotional State: Your emotional condition before, during, and after the trade.
- Market Conditions: What the market was like when you made the trade—volatile, calm, bullish, or bearish.
- Outcome: Profit or loss from the trade.
My Tools
For Trade tracking I use Trader Vue. Not to be confused with Trading View. Trader Vue allows you to upload your trades and then organizes them so that you can spot trends as well as keep track of your Profit and Losses.
Insight like when what times you make your best trades can be pulled from the data. So if for example all of your worst trades after 1pm. You would want to limit your trading after that time period or analyze the situation more closely to find out why.
I no longer Journal like I used to when I was learning. But I created a Trade journal that I use to keep myself focused on the trade day. You can find that here.
I also keep screenshots of Chart formations. I have a folder my desktop and If a scenario comes up. I screenshot it and put in the correct category. I review all the scenarios on Sunday before the trading week starts.
It takes time (years) to see enough scenarios to learn the markets and since the market has changes in mood from time to time there are some scenarios that you wont see on a frequent basis.