The Forex market has so much going on all of the time that being able to keep track of each movement is impossible. No matter if you are a serious trader or someone that is simply looking at dabbling, the most important thing of all is that you have a willingness to pay close attention to your own trades.
Of course, you will then wonder how on earth you do that, or what kind of information you keep track of, so allow us to help.
A Trading Journal is Important
The easiest way to do this by some distance is to use a trading journal. This is something you can create on your own by setting up a spreadsheet or even just drawing it out on some paper.
The aim of the journal is to provide you with an easy glimpse into the actions you have been taken and the plans that you have put into place for those actions. You can add in any kind of information that you feel is relevant to your entire plans so there is some leeway as to what will be included.
This type of journal will also allow you to look back in time at your previous trades and determine where you perhaps went wrong in order to learn from those mistakes. It also allows you to keep track of your strategy and where you are in your long-term goals, which is always useful.
The Key Information to Include.
While we did say that it is entirely up to you as to the information that you include in your journal, we do have a few pointers that will make things a bit easier.
Your main focus should be on each individual trade. You may wish to include the date when you bought a currency along with the pairing details. Look at adding the exchange rate that you had at that moment and what your target is before you then put into place the next part of your plan. Of course, with this target aspect there’s no need to enter a date as that is something out of your control.
It Needn’t Be Complex.
One of the things that we must stress is that there’s no need for this journal to become complex. In fact, we suggest that you try to keep things as simple as possible. It allows you to have a better understanding of what you are doing with your trades.
Give Reasons for Movements.
Aside from the stats and figures we mentioned earlier, you should also look at giving reasons for the different movements or actions that you undertook. The aim of this is to then provide you with an option of looking back to better understand why you did something and what the eventual outcome may have been.
This can then form part of your education. You need to be willing to learn from your mistakes but the only way in which you can do that is if you are in a position to identify them in the first place.
That is why giving reasons for your actions and movements can play such an integral role in your journal. It gives you that snapshot that you have been searching for.
Check on a Regular Basis
No matter how confident you may feel about your trades, checking on your journal on a regular basis can also act as a grounding thing to do. Remember that a number of profits in a row can lead to people losing their mind and taking risks that they would have normally avoided.
This is certainly not the kind of action that you want to be taking on a regular basis. Instead, you need to constantly refer back to each trade and understand that you may be riding the crest of a wave right now but that it can come crashing down.
A journal stops you from needing to constantly check in on too many things at the one time. It allows you to get a snapshot of what is going on and to then act accordingly. Also, it allows you to avoid falling into the same traps as you did before, and who wouldn’t want to avoid doing that kind of thing when a lot of money is involved?
Imagine how easy it is when everything is in a table with just a few bullet points. That alone saves you a huge amount of time trying to locate information that may be useful, or sitting there attempting to mentally retrieve information on trades from the distant past. If you try to do that then is it any wonder that you would then be prone to making more mistakes?
We would even go as far as to say that you should start your journal even when you are playing around with a demo account. This is the time where you are learning the ins and outs associated with trading on this kind of platform, and it’s a perfect opportunity to take advantage of making mistakes without it hurting you in the pocket. Imagine how much easier it is if you can look at your actions from this time and know that certain strategies or approaches just didn’t work at all.
So, if you have never thought of creating a trading journal or feel that it’s a waste of time, then please do look at changing your opinion. Everything becomes so much easier when you have this at your disposal. You get a clearer idea of what is going on with the market and your trades just by looking at a few pages or a spreadsheet on your laptop.
This is all free to do, and it’s a method that is used by highly experienced traders that have made huge fortunes in trading on the Forex markets. Ask yourself this question. If it’s good enough for them, then why would it not then be good enough for you?