phone and calling or Skyping our mentor. We may not even
have a mentor. Often we have to keep our own counsel, and the
danger in that is, as the old saying goes, that “a lawyer who represents
himself has a fool for a client.” The way to avoid falling
into the trap of making up excuses why you did not take a trade
or why you exited a trade early or even lying to yourself about
your actions and prospects is to keep a trading journal. It may
sound like a stretch to be less than truthful about why you did
what you did in your trading account, but we see it time and
time again in our students when they trade on what they think
is going to happen instead of on definitive signals that already
have occurred or at least are unfolding. Another reason why
90 percent of speculative account holders lose money is the disconnect
between what their trading plans tell their brains to do
and what their brains tell their index fingers to do when clicking
the mouse. If you fall into this trap, how are you going to
fix it if you don’t confront it? By writing these things down in
your trading journal you will be shining a light on what’s
trying to stay in the shadows of your subconscious.
A trading journal is more than a depository for market
observations and lessons and more than a place to record and
check off the necessary conditions as dictated by a trading
plan. Your trading journal is going to be your alter ego and
your confessional. You can feel free to write down anything
related to you whether it pertains to trading or not. Remember,
trading is over 90 percent mental, meaning there is a lot
going on in both your conscious mind and subconscious
mind that will affect your trading in addition to what you see
on the charts. You need to create an organized, supportive
work environment in which to trade. Start planning to create
this environment by writing out the blueprint in your trading
journal. You need to maintain a focused and diligent
mindset and be aware of the dangers of fast money and its
intoxicating effects. Write down your thoughts and observations
on this in your trading journal. You need to come to
terms with your fears and make a thoughtful decision about
whether trading is for you. Is trading worth the risk of both
time and money?
Yes, you need to write down the conditions that existed on
the chart and in the market when you sized up a trade and
then entered your position. However, you also need to make
it your job to put yourself and then keep yourself in a healthy
place mentally before, during, and after trading, and your
journal is going to help you do that. Nobody is as well suited
to taking care of you as you are—for the most part. Things
that you think and feel are going to come out in your journal,
and by noting what comes out of the end of your pen,
you are going to be aware of your concerns and plans and
triumphs.
What you write in your trading journal is up to you. If there
is one thing that should be mandatory, it is that every time you
make a trade, whether a demo or live, you need to write down
the following:
1. Market traded
2. Direction traded from
3. Date and time
4. Signals used
5. Time frame traded
6. Trend or countertrend
This is going to help you and your mentor see where you
are in your current knowledge and, more important, help
highlight any mistakes you have made. One of the backbones
of the learning process at www.Trading-U.com is going over
the demo trades the students make. The knowledge that every
trade they make must be reviewed by an instructor has a positive
effect on the students’ trading because they take the exercise
more seriously as they learn to focus on every detail of the
process. We recommend that if you do not decide to participate
in our mentorship programs, you at least try to get
involved with a group of like-minded traders and insist on
putting the information we’ve just listed in a spreadsheet and
sending it to the other members of your group. Set up a time
to pull up your charts and review your trades with a friend,
candle by candle. Each trade you make will be slightly different
from the last. There are a hundred variations of a setup.
The only thing that can come close to having experience is
reviewing a friend’s trades candle by candle and seeing the
same order of operation unfolding each time. You will learn
how to filter trades and how to confirm trades, and that will
improve your winning percentage and increase your confidence.
All this is information you can write in your journal.
Make sure to write down the occasions when you’ve made
mistakes, because it is from mistakes and lapses that you will
learn the most!
Source: Mastering the Currency Market: Forex Strategies for High and Low Volatility Markets
