There's an old saying in business that goes something like "if it’s worth doing, it’s worth tracking." That is because when you track activity you have the ability to analyse performance, to spot weaknesses and highlight strengths. When you track activity, you are plotting and analysing your performance. Keeping a forex trading activity log gives you the means of doing precisely that in relation to your Forex trading performance.
Forex trading is a learned skill. Like any skill it needs practice, analysis and review. Keeping a log helps you analyse and review your trading activity. Some traders log everything that they do related to trading. Others track what they regard as key activity. The point is that almost without exception successful traders keep trading logs.
What you should keep in a trading log
In a word you should log everything that is from the start of the trade until its completion. Everything means everything.
If you get distracted right it down. If you feel excited write it down - conversely if you experience fear or nervousness - write that down too.
While the recording of your emotions is important, so too is your own analysis of the forex market and the reasoning behind your decision making. Screenshots of charts accompanying your notes can help in this regard.
Document your reasoning behind the trade and your plans surrounding it. Key elements to include here are -:
- The specific reasons why you entered the trade
- Your trading strategy including planned stop loss and planned profit target
- The actual amount of money you are putting on the line
Once you’ve documented the reasoning/planning you need to document whether you actually followed through on all aspects - did you stick to your trading rules?
It is important to understand that nothing is too silly to record. You are looking for patterns and the more information that you record, the more you will be able to recognise your own patterns of behaviour and importantly which trades and currencies you perform well in and which situations consistently expose you to losses.
When to write your trading log
There’s no time like the present. Trying to document something hours or days after the event is almost impossible. Take the time to write down your thoughts and reasoning before entering the trade and document any adjustments that you make when you make them. The most important log of all is the log you make when the trade is finalised. Make sure that you make it as soon as possible after the trade is done.
Like many other aspects of Forex trading, keeping a trading log requires discipline and commitment. If you’re going to be involved seriously in Forex trading, you simply must make the time to keep a Forex trading log. If you would like assistance with keeping trading logs, spotting patterns or any other aspect of forex trading, the USGFX forex education centre which includes the availability of one on one coaching is available online for you to access today.