How to Keep a Trading Journal the Easy Way (and Why)
Maybe you've heard of a trading journal. It's where traders track their trades and thoughts throughout the day. It's a great trading tool because a thorough trading journal includes details beyond what you can see on your brokerage statement. It includes whether you were feeling sick, what market conditions were like, if you were distracted or made mistakes (which made or lost you money you otherwise wouldn't have made).
It's also where you can record strategy ideas which may arise as you trade throughout the day.
No question about it, all traders should keep a trading journal. But day traders don't have time to be spilling their guts on paper all day. In fact, keeping a trading journal while trading--when the action is happening--could actually be counter-productive, leading to missed trades and focusing more on journaling properly than trading properly!
Here's the easy solution. It involves absolutely no handwriting and gives you a historic record of the exact market conditions you were facing on a particular day.
How to Keep a Trading Journal...the Easy Way
A picture tells a thousand words, right? Perfect, let's use a picture. Instead of writing what market conditions were like, what mistakes were made, what we did well and what new strategy ideas we had, take a screenshot of the trading day with some typed annotations on it.
Most traders mark up their charts throughout the day anyway, drawing lines and marking indicator levels which help determine the trend and find possible reversal/target points. The chart shows the exact market conditions being traded. Our intraday analysis (via lines and indicators) shows how we were perceiving the market that day...something words in a trading journal could never describe as well.
A picture is an easy way to keep a trading journal but to make it useful when you look back at it (for review, so you can improve your trading) you need to include certain things.
A Trading Journal of Pictures - How to Mark Your Charts
Here are the basic guidelines for marking up your charts to make them useful for future reference.
- Try to include a bit of price action (an hour or two) before you begin trading. This provides a context for what was happening when you started trading. You don't need to include price action from the prior day, just a couple hours before you start, if applicable (no action before you start, don't worry about this). See What Time Frames to Watch While Day Trading Stocks for more on this topic.
- Mark your start time with a vertical line or text note on the chart. This lets you know if you started trading early or late, and/or why you may have missed some trade signals earlier in the day.
- Write down the times of major economic events you will be stepping aside for. When that time comes around, make a note again that you weren't trading because of news.
- Make text notes throughout the day about tendencies you notice, and comments on market conditions. If you make an error, make a note of it. If you miss a trade, make a note of it.
- Keeping as many trendlines and drawings on your chart as possible (assuming they don't distract you). They help to show your future self how you were seeing the market in real time at any given moment. See 5 Things that Simply Trading and Reduce Clutter.
- Mark trade levels--entries and exits--along with profits in cents, pips or points if trading the stock, forex or futures market respectively.
- Mark when you stop trading for the day with a vertical line or text note.
- Type how many trades you made, how many winners and the total profit for winning trades, how many losers and the total loss for losing trades, and the net result (total profit minus total losses). Ideally, avoid using dollars. Instead, use pips for forex, cents for stocks or ticks/points for futures. For example, if trading the ES Futures contract, instead of saying 4 winners $400 - 4 losers $200 = Net +$200, say 4 winners 8 points - 4 losers 4 points = Net +4 points. Dollar figures fluctuate based on position size, whereas points/pips/cents can be compared over time regardless of position size.
At the end of the trading day take a screenshot of your chart (click on the chart, and hit Alt+PrtSc). Then paste into a photo editor (can be a free one like Paint, Irfanview, or Gimp. Save. It should include all the information above, without being too squished--you still want to be able to see everything that went on. If you can't see everything on one chart, take two or three shots and save them separately.
Save each day as a file in the format: month-day-year-screenshot #. If you only have one screenshot for the day, it will just be the date. But if you have three screenshots for the day, each is saved with the date as well as 1, 2, 3, etc on the end.
Create a trading folder on your desktop, and create folders for each month within it. Put each screenshot in the appropriate month folder.
Keeping a Trading Journal the Easy Way - Final Word
By taking screenshots of your trades each day you capture much more information than you could by just writing in a journal. Plus, if you do want to write stuff down, you can do so right on your charts, or keep a written trading journal as well. Be diligent in this routine, so that you have every trade you make recorded.
At the end of each week and month go back and see what you did, notice common problems, and spot your strengths. These observations can help you exploit your strengths and highlight what areas you need to work on.