Trader Tools - Trading Journal - Psychology Trader Journal

The second journal I will talk about is the Psychology Trader Journal. This is one of the most important journals to have and if you are a discretionary trader, it is a MUST HAVE. A trader can be compared to a high performing athlete, where you are responsible for your own results. The more you practice, the better you get (or the more profitable you are). So this journal it is like a trading coach. It tells you what to do so you can get better. What should you practice? What skills should you develop?

The first session is the strategic part of it and is is done before the market open. It has two parts:

• Goals for the day - these are the goals I am trying to complete by the end of the day. 
• Risk Management - how I am going to control my risk during trading hours. If I stay way on vacation or if I did not trade yesterday, I lower my risk parameters. During earning season, I increase my risk parameters. 

Next session of the journal is updated after each trading session: the morning session and afternoon session.

• AM / PM Mental State - describe how I felt during the trading session. Confidence level, sleepiness, boredom, anything that goes through my mind.
• AM / PM Trading Session - describe how was the trading session and how well did I trade it with a small review of the traded stocks. 

  

After the market is over, I start updating next sessions:

Today Summary

• Trading Summary (Describe the day) - complete description of how was the market today and how well did I trade it.
• Trade of the Day / Playbook - best trade of the day. Usually the most profitable, but not always. Could also be the best executed. This trade will be reviewed again in the blog.
• Worst Trade of the Day - write down and review your bad trades. Find your mistakes in the trade. Think that every mistake is a lesson that you paid the market to teach you. If you learn nothing from it, trading will be very expensive for you and you most likely will fail.
• Risk Management Review -  review of how did you controlled risk, rules you broke or trades you were not in control.
• Also take note (other trades or relevant info) - this is the "others" were I write any other thing I find relevant.

Learning Experience

• Did Well Today - I write down the things I did well today. Recognize my strength and try to repeat them next trading session. 
• Could´ve done better - things that need to be improved. You can always turn this into goals for next day. By improving the things here you will become a better trade. A trader must be humble or he will fail. Most people have trouble accepting their failures and it is hard. Turn them into lessons. 
• Things you learned today - new things you learned today. It could be about the market, about trading, about yourself, it does not matter. How are you better today, than you were yesterday? 

Goals Evaluation

• Daily Goals Evaluation - did you manage to achieve your goals for the day? What lessons did you take from it?
• Weekly Goals / Evaluation - did you manage to achieve your goals for the week? What lessons did you take from it?
• Monthly Goals / Evaluation - did you manage to achieve your goals for the month? What lessons did you take from it?

This journal help me practice my trades. By reviewing them you learn from them and improve into next trade, just as a high performing athlete. Repetition is the key. This is why preparation is more important than the actual trading itself. Mistakes will be made, and it is a part of trading. Learning nothing from it, that is preparing yourself to fail.
Also keep in mind that this is my template for the journal. From time to time I change the journal to adjust it for my trading needs. You must feel comfortable when you are writing and reviewing, so create it based on your personal or trading needs.

Go back to the introduction about journals, click here.