What is a trading journal and how do traders use it?
The trading journal is one of the most underrated tools in the world of trading. The task of keeping such a journal can seem tedious in the beginning, and most traders lack the patience and discipline to update the trading data frequently.
Nevertheless, for those who keep a trading journal over the long term, it could prove extremely helpful on the journey to becoming a profitable trader.
Becoming a profitable trader means breaking down what goes right or wrong with every trade, which will help improve decision-making and prevent common trading mistakes.
In this guide, I will break down exactly what a trading journal is, how to create one, and list some of the best trading journals available.
Table of contents
- What is a trading journal?
- What are the benefits of a trading journal?
- List of forex trading journal software
- How to create a trading journal?
- What should a trading journal include?
- Steps to journalling a trade
- How to review your trading journal?
- Reasons why people don't use a trading journal
- Free trading journal template download
What is a trading journal?
A trading journal is a way to track your trading performance by recording your trades which you can later review to improve your trading activity by learning from both your successful and not-so-successful trades.
Tracking your progress allows you to study mistakes that you have made when opening or closing a position. It also helps you to stick to your trading plan and enhance your ability to make better executions in the future.
It can be much more than just a log of all the trades you've executed. It can be whatever you make of it. Traders can write down their thoughts, emotions, and observations during their post-trading analysis. It is important to take note of an important observation as soon as possible, as some of it might get lost during a hectic trading day.
What are the benefits of a trading journal?
Keeping a trading journal is a simple task that can provide significant results if kept up to date consistently. Using a pen and paper, a simple Excel document or trading journal software to track all your data can inherently develop a successful strategy and help avoid repeating common trading mistakes in the long run.
The key benefits of using a trading journal are:
- Finding the right trading style: If you are day trading, but your journal clearly shows that you are often stressed out and fail to manage the risk correctly, perhaps you are more of a swing trader. Trading medium/long-term is not any easier than short-term trading, but some traders are more comfortable with it, as they can spend much more time analysing the data and do not have to make quick decisions. Trialling different trading strategies can help you find the right trading style.
- Identifying your strengths/weaknesses: If you are consistent with your journal, certain patterns should emerge over time. You should be able to identify your key strengths and weaknesses, which will help in finding the right trading style and strategy.
- Source of information: There is no trader who knows everything and can afford to stop learning. The markets are evolving all the time, strategies stop working and edges disappear. Therefore, traders need to educate themselves continuously. One way of doing it is by making observations about the market and taking note of those. Perhaps one of those observations will turn into an edge one day.
- Discipline - After some time, keeping a trading journal will not appear so tedious anymore, but a normal part of your trading day. It will help a trader to be more consistent and teach discipline.
- Numbers don't lie: If you keep trading statistics as part of your trading journal - even better. Along with your own observations, the stats will give you important insights. Starting a trading journal is fairly easy, but being consistent is the difficult part. Furthermore, a trading journal is very personal. There is no correct way of doing it, as every trader must know what is most important and how they want to structure it.
- Master emotions: Tracking trades is a smart way to analyse behaviour patterns and can shed some insight into your own personal trading psychology. It's impossible to remove your emotions entirely from your trading process. However, being able to record your thoughts and emotions at critical times like entry and exit points can help with making bad decisions.
- Improve risk management: Risk management at its core is assessing the level of risk you are okay with taking based on all the variables of the trade. By logging each trade in the journal, you might start to notice areas where you have the wrong mindset and by adjusting risk levels have a better chance of finding success and prolonging your capital.
List of forex trading journal software
Here we break down the best trading journal software available for all traders, comparing their features, pricing, and supporting assets.
Microsoft Excel
Microsoft Excel is the original tool for traders looking to start their first trade journal. Using a trading journal in Excel gives you full control and a ton of functionality by building a spreadsheet from scratch or downloading a free spreadsheet template from the web.
If you are Excel-savvy then setting your journal up will be easy, but for users who aren't across the financial-related functions and macros, you will have to spend some time getting it ready. Remember to double-check and triple-check the spreadsheet! You don't want any mistakes that could potentially skew your trade history.
Price: Free / a standard license
Assets supported: All financial markets and assets
PsyQuation
PsyQuation uses AI-driven insights to help improve trading performance and start making better trading decisions. The PsyQuation Score tracks your trading skills and compares you against other traders in the forex community.
The trade journal inside PsyQuation allows you to select the most important metrics to display including S/L, T/P, Duration, Commission, Order, Swap, and Tax.
Price: Free standard account or Premium account for Axi live trading accounts
Assets supported: All MT4 assets supported
Trademetria
Trademetria offers the boost you need to your trading performance in its all-in-one trading journal software. The tool offers the ability to monitor multiple metrics on multiple accounts, with impressive charting, backtesting, journal features, and connections with 140+ platforms and brokers.
Price: Free plan (limited features), Basic plan ($29.95USD/mo), and Pro plan ($29.95USD/mo)
Assets supported: Equities, options, futures, forex, crypto, and CFDs
TradesViz
TradesViz is an advanced online trade journaling tool with a range of advanced performance analysis and stock charting features. One of its best features though is the post-trade analysis and visualisation, with 70+ different base charts which can be customised to control the granularity of your trading data.
Start a free trial for 7 days or enjoy their free plan with limited features until you are ready to upgrade.
Price: Free plan (limited features), Pro plan ($19.99USD/mo), and Platinum plan ($29.99USD/mo)
Assets supported: Stocks, stock options, futures, future options, crypto, and forex
TraderSync
TraderSync is a cloud-based trading journal software available on desktop and on mobile through their trading journal app on both the Apple App Store and Google Play. Experience a range of the platform's features during a free 7-day trial, including intraday charting, trade-specific analytics, the ability to share trades, performance reporting, and more.
With the help of AI feedback, TraderSync takes the hassle of having to manually update a spreadsheet every day and automates the whole process for you, delivering insights in a simple and easy-to-understand format.
Price: 7-day free trial, Pro - $29.95 USD/mo, Premium - $49.95USD/mo, Elite - $79.95USD/mo
Assets supported: Stocks, options, futures, future options, and forex
Tradervue
Tradervue was one of the first online trading journal platforms and is still quite popular today with a lot of professional institutions. The core of the platform and its features consist of three main elements: the trade journal, trading analysis and sharing trades.
It offers a free subscription with limited features and the ability to track up to 30 trades per month, which is a worthwhile demo to test before signing up for the paid service.
Price: Free plan (limited features), Silver plan ($29.00USD/mo), and Gold plan ($49.00USD/mo)
Assets supported: Stocks, options, futures, and forex
Edgewonk
Edgewonk is another powerful online trading journal tool, fully customisable with powerful analytics, gamification features, and a solid list of supported assets.
Regular and professional traders can benefit from the many advanced features offered and journal trades from anywhere and any device, thanks to Edgewonk using a web-based cloud server. With a clean UI including light and dark modes, Edgewonk pricing is at a reasonable fixed annual rate.
Price: Pro plan ($169.00USD/year)
Assets supported: Forex, stocks, futures, CFDs, crypto, and commodities
How to create a trading journal?
Now that you know the key benefits of keeping a trading journal and understand that to be a successful trader you need to be consistent, here are four easy steps to set up your very own trading journal.
Find your preferred method of keeping a journal: pen and paper, excel, or trading journal software.
Decide what information you are going to track: instrument, long or short, date of trade, the strategy used, reward to risk, successful or unsuccessful, etc.
Enter your trades into the journal after you have finished placing stop losses and take profits. This is the most important step and you'll need to remain consistent and diligent when recording trades.
Review your performance after the delegated amount of time you have set yourself (daily, weekly, or monthly), and analyse the trades.
What should a trading journal include?
In its simplest form, a successful trading journal includes such elements as:
- Date and time of a trade
- The instrument being traded
- Position size
- A long or short position
- Entry and exit points
- Result of the trade when the position has been closed
Additional elements can be included to further evaluate your trading style and performance. Remember, there is no right or wrong way of keeping a journal, it's a personalised document to help an individual trader analyse and improve their trading.
Some additional elements could include charts, market conditions commentary, and your reasoning for opening the trade.
Steps to journalling a trade
If you invest your time properly into managing a trading journal, you have a great chance to increase your success rate with future trades. Conducting post-trade analysis following these steps will ensure you are using your time proactively when journaling your trades.
- Log all of your trades: When you first create the trading journal you must decide what information you want to log, this includes things like the instrument, entry and exit points, and size of the position. After every trade you need to ensure you are filling out all the information points for each trade you made during that day.
- Capture an image of the chart: Capture the chart at the time you entered into the trade and mark it up to detail with buy and sell points, technical indicators, support and resistance levels, and trendlines. Depending on how you've set up your journal, include this image capture with the journal entry.
- Write specific notes about the trade: Recap the trade in your own words, either on the image capture or in a section of your trading journal dedicated to writing down key information. The most important thing to jot down is whether the trade went good or bad, and why.
- Review your data, notes, and chart captures: Taking time to review all the trades you have made in a day can help you identify potential mistakes or areas of improvement in your strategy.
How to review your trading journal?
By now you should have a few rows of trading data in your spreadsheet and can review it to improve your trading results. Below are a few tips for using a trading journal successfully and reading the data.
Here is what you should look for:
- Pinpoint patterns that led to losses
- Check the notes and trade entry and exit on the losses
- Pinpoint patterns that led to winners
- Check the notes and trade entry and exit on the winners
- Improve the process based on the above points to minimise losses
- Improve the process based on the above points to maximise gains
Reasons why people don't use a trading journal
Let's have a look at the two main reasons why traders do not start a trading journal or fail to be consistent with it.
Time
It can appear time-consuming to keep a trading journal, especially if you are a short-term trader. Beginner traders will often say: "I don't have time to keep a journal, I have to watch the markets!"
Indeed, as a trader, you make money by identifying good opportunities and not by writing a journal. However, one does not have to write down a note after every single trade, instead, makes short notes after spotting something important. In the evening hours - when it is usually less busy - you can then put together a quick summary of the trading day and the key conclusions.
Keeping a journal should not be a forced activity. If it is quiet in the markets or if there are no new observations worth writing down – there is nothing wrong with skipping it.
The truth can hurt...
A trading journal is most efficient when a trader is honest with themselves. That does not mean that there should be too much negativity. Comments like "I had a terrible day! I'm wondering if this is worth my time and if I will ever succeed" won't make you a better trader. Instead, make observations and try to identify what exactly went wrong.
Example: "I identified a good trading opportunity, but due to an overflow of information I became insecure and closed my trade way too early."
What could be the solution to that? Perhaps the trader in this example is spending too much time on Twitter and the tweets from various sources made them feel insecure.
Free trading journal template download
Download a free trading journal template here
A trading journal should be simple and tailored to your specific trading style and the goals you would like to achieve. To help get you started we have created a trading journal template that you can utilise and build upon to help track your performance.
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This information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. It has been prepared without taking your objectives, financial situation, or needs into account. Any references to past performance and forecasts are not reliable indicators of future results. Axi makes no representation and assumes no liability regarding the accuracy and completeness of the content in this publication. Readers should seek their own advice.
FAQ
What is the best trading journal?
The best trading journal is really up to the trader to decide on what they need from a trade journal and the level of depth they seek. An Excel spreadsheet requires manual entry of trades but is not limited by the number of assets it can support, being a cost-efficient way of logging trades. If traders need more advanced journalling tools then the best trading journal software is what they need, with many impressive features and reporting.
Are trading journals effective?
Yes, trading journals are one of the most effective trading tools available to new and experienced traders. The more consistent and rich data that is added to a journal, the better the insights, and the easier to identify patterns and review trade data to improve future trade setups.
How do you record a trade in your trading journal?
When you have entered a trade open your journal and enter all the key metrics, like date, time, instrument, strategy, entry point, exit point, position size, and some notes on your thoughts at the time. Depending on the trade journal you use, some details will be automatically added while you will have to manually add your emotions and feedback about the trade.
