Trading Journal + Trading levels for 11.29.2022

Keep a Trading Journal!

By John Thorpe, Senior Broker

You’ll often hear us say ‘plan your trade and trade your plan’.

I’ll add to that “and keep a detailed Trading Journal or Trading Diary”.

There are a number of important ways you can develop as a trader by documenting and reviewing your daily trading activity.

1. Skill development – a diary allows you to see where in your analysis you were correct, but most importantly where you were wrong. Most of us find it difficult to admit when a mistake has been made. A conversation in the mirror is helpful to overcome this frailty. Not calling out your mistakes will hinder you as a trader, learning from your mistakes is one of the most effective ways of improving any skill set. Michael Jordan’s secret to success was captured in his quote; “I’ve missed more than 9000 shots; I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that’s why I succeed” Fearlessness when it came to failing. Honesty first, with yourself.
2. Improves your trading strategy- giving yourself the ability to look back and potentially avoid making the same mistake more than once. You can identify the successful strategy whether it was due to a set-up, a particular way the market was behaving, before a report or after one or perhaps your risk management strategy. After evaluating the success or failures of your trading strategy, you may conclude that you need to change that strategy.
3. Key elements to your diary-

Date and time

Position size ( in notional value relative to your account size)

Details of the transaction, Long or Short, entry price, risk management used (stop, option or spread) trade outcome. Keep notes of specific market behavior during times like holiday trading, specific reports ( CPI, NFP etc.)

Record your why, your rationale for the trade. Record your emotional state (well rested, anxious, excited) Was it a busy day?, did you monitor the trade?, did you go to the gym?, did you leave for a few hours? Why did you close the trade? Did you get nervous? Was the market beginning to change complexion?

Setting aside time to review your journal once a week is highly recommended to gain the maximum use out of the experience. A trading journal or Trading Diary is not just about the initial documentation, but the review is what will create a better understanding of triggers, both good and bad that you can learn from and improve your trading strategy for years to come.

A Cannon broker will be able to assist, provide feedback and answer any questions.