This is a Guest Post by AK of Fallible
AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.


 
PUT_CHARACTERS_HERE

Today we are going to discuss why you need to keep a trading journal. We’ll talk about why it will improve your results and also how to make one.

PUT_CHARACTERS_HERE

Trade journals are useful because they let you become your own coach. The journal is the equivalent of game footage. And what do all great players do? They watch footage of themselves. That way they can see what works and what doesn’t, and adjust accordingly. That’s the same thing you’ll be able to do once you have your trade journal in place.

PUT_CHARACTERS_HERE

The most important thing about keeping a journal is to keep it simple. You don’t want it to be over complicated because then it becomes too difficult to use daily and you won’t use it.

PUT_CHARACTERS_HERE

There are 3 parts to the journal. Pre-trade, during trade, and post-trade.

PUT_CHARACTERS_HERE

In the pre-trade entry you’ll want to list the setup, your thesis, position size, risk point, and anything else that goes into your process before you place a trade. During the trade you want to record any changes you may make to the position. Trade management is one of the toughest parts of trading, so it’s important not to skip this. Post trade is where you record the exits, profits, and do a post-mortem on the play.

PUT_CHARACTERS_HERE

An extra benefit of this process is that writing down everything you’re going to do before you do it will help you stick to your trade plan. The extra step of writing takes out any impulse decisions that may occur. It’s an extra safeguard.

PUT_CHARACTERS_HERE

Writing is also helpful to manage emotions. Writing down how you feel will alleviate those feelings and also clue you into whether or not you should be trading in that state of mind.

PUT_CHARACTERS_HERE

For more, make sure you watch the video above.

PUT_CHARACTERS_HERE

And as always, stay Fallible out there!