The idea if keeping track of trade ideas, decisions, as well as outcomes may appear to be tedious. However, it is vital ensuring consistency in forex trading as well as maintaining long-term productivity. A complete journal is made up of persistent trade details, including entry and exit prices.
Keeps trading psychology details
A forex trading journal also comprises of the number of pips gained or lost, as well as notes on your trade decisions. This is vital in keeping trading psychology details which include your confidence in taking the trade set up, your reactions to expected as well as unexpected market events and your decisions midway through a trade. In many ways, by keeping these details, a trader gains insight on the role emotions and mindset play in their trading performance.
Reveals crucial strategies
Just like any professional athlete tapes and later views his games, a trading journal is vital in assisting to reveal crucial strategies and tendencies which can go a long way in leading to improvements. Whether it is basketball, football or performance sports like gymnastics, elite athletes will often refer to tapes to analyze their performance and think or what needs to be perfected.
When it comes to forex trading, it is vital for a trader to record their trades, especially those involved in scalp trading. It is worth noting that other traders resort to having mentors who can offer a rundown on how a trade played out as well as the key decisions that have an impact on profitability.
Helps in monitoring common mistakes
Reviewing a trade journal offers one with the ability to monitor the common mistakes you make as well as the specific action steps required to avoid them. For instance, you will realize that you are setting your stop losses too tight when trading news releases. You are therefore in a position of reminding yourself to add more leeway in your next trade.
In case you realize that entering trades at market makes you a bit nervous and uneasy with your trading decisions, you can ensure that you go for limit entries on your subsequent trades to ensure that you have a healthier and more stress-free trading mindset.
Helps in keeping track of numbers
Moving forward, you will be in a position of gaining more confidence in taking your usual trades set ups or sticking to your trade strategy. By maintaining a trade journal, you will be in a position of keeping track of the numbers as well as statistics. This is instrumental in giving you the guarantee that your plan can make regular profits.
As a result of the confidence, you can then concentrate your energies into implementing appropriately instead of being skeptical your trade choices.
Helps in identifying emotional pitfalls
Many a times, the most challenging part of becoming successful for many beginners in forex trading is permitting their emotions to influence how well they stick to their strategies as well as processing of information. A trade journal will therefore have records of what your emotions were, as well as the underlying reasons.
This will be instrumental in helping you to effectively identify and short circuit potential emotional pitfalls in the future. This will be effective in helping you improve and arrive at a consistent profitability. It is worth noting that following a trade strategy is not an emotional decision. Most people who succeed in the industry are those who think and act on the basis of probabilities.
Ensures the flow of fresh ideas
Another key reason why maintaining a trading journal is vital is due to fact that it helps in documenting fresh ideas. It may not be possible to remember the details a week after a trade. It is therefore vital to write out your thoughts and reasons for the trade before initiating the trade. Eventually, when the trade is over, the journal entry is the most important.