A trading log is where you keep a record of your trades. As a day trader logging every trade during the day is almost impossible…at least for me, because I am fairly active in multiple markets. Yet it is still important to keep a record of trades…and not just the trade record your broker should provide.
Creating a Trading Log
First of all, a trading log doesn’t need to be an excel spreadsheet or a written journal, although doing it that way is fine if you are only making a couple trades a day.
The trading log can be a screenshot that shows where you look trades on the chart. Makes notes on the chart to indicate what strategy you used to enter, where you entered, where you exited, profit and losses on each trade and overall profit and loss for the day. If you skipped a strategy signal, jot down why.
At the end of the trading just hit “alt – print screen” on your keyboard, to save your the image of chart. Give it a name–such as today’s date. Do this every day and save them in a folder. This way you can go back and see exactly what you did each day..and actually see what the market conditions were that day.
What to Include
Here are things you want a record of each day:
- Put your general thoughts down as the price action progresses throughout the day. When looking back this will give you a good idea of how clearly you are interpreting price action.
- Entry and exit points for trades
- The strategy you used to get in and out. Typically I index my strategies and give them a short name (F, C, PB, V etc). I can then quickly put that label on my chart, and down road, if I look at that chart, I know exactly what strategy I was using. This of course requires that you have a well defined strategy, which you should!
- Daily totals: how many trades? How many winners? How many losers?
- Ideally you should be trading the same position size on each trade during the day, if it changes, note why and then write your various position sizes for each trade.
- Note trades you don’t take, and why.
- Draw on your chart, highlight and trends and resistance/support that affect your trading decisions.
How to Use It
Once you have your chart saved for the day, review it. And at the end of month, quickly go through all your charts you have saved for the month.
The goal is to go back and see how well you did at following your trading plan and strategy. Did you skip lots of trades you should have taken? Did take lots of trades you shouldn’t have?
By addressing these questions as you go through your charts, you’ll likely realize that if you just stuck to the plan you’d have likely done much better than you did.
Don’t beat yourself up over it. By going through this process constantly, eventually it will seep into your brain that you need to follow your plan to be successful, and behavioral changes will follow.
One mistake is to look through the chart/trading log and try to figure out ways in which you could have made way more money on a particular day. This is generally a fool’s errand. What would have made you a bundle today may lose you a bundle tomorrow, and changing how you trade each day is a sure way to go broke. Instead, just stick to a couple strategies and try to implement them as best you can. Focus on following your plan.
A trading log tracks what you are doing with your trades during the day, so you can review those trades later for “quality assurance” purposes. I find the best way to keep a great daily record is to write notes on my charts throughout the day, mark my trades and strategies utilized, as well as any other pertinent information, and then save a copy of the chart on my computer. By putting this information right on the chart, it is much easier to look back and get a sense of what was going on that day.
Use these trading logs for review–review at the end of the day and review at the end of the week or month. Note how often you deviated from your trading plan, and how sticking to the plan would benefit you. This is a tool which will help you develop discipline in sticking to a winning system, if you use the tool correctly.