Forex Journaling is writing down and taking screen shots of your trade. Human are habit by nature. Reviewing your journal before trading can help get you mind on track and figure out how to trade better and break human nature to repeat the process with great success rate.
Before: Once you have draw n on your technical analysis and you are ea- gerly awaiting your perfect entry point, at this point go ahead and take a screen- shot or an image capture. The screenshot must be taken on the timeframe in which you shall be executing your trade, as well as including the price and time, which is found along the bottom. Once you have done this, name your image with the currency pair and date.
After: Whether your trade has played out to your analysis or not, it is vital that you take a second screen shot as this will become a template for any trades you place in the future.
If your trade has played out the way in which you had predicted then great; keep doing what you are doing! However, if you are unsuccessful you now have the material that will help you to understand what exactly went wrong and this will prevent you from making the same mistake in the future.
It is imperative that you stay disciplined and on top of your post mortem analysis, as over a long period time this will collectively become your history as a trader. Not only will it become a foundation for your present performance but it shall also demonstrate how much you have improved.
All professional traders will view each trade as a transaction and so the im- portance of keeping a log is paramount. In combining your spreadsheet and post- mortem you will have a full proof trading journal, assisting you to grow into the successful trader you endeavour to be.
You must record each trade you place and ideally you would do this in a spreadsheet format. Completing your spreadsheet should be done whilst you are entering and exiting any trade. Once you close your trades you will use this com- prehensive list of transactions to assess your trading. You may want to include the following columns:
Position (long/ short) - Date opened
Stop loss or take profit - Win or loss
Seeing as though each trader is unique, there is no 'correct' spreadsheet. This crucial aid to your organisation should not feel as though it is a chore, so de- sign it as you wish!
Creating your spreadsheet is not difficult, however keeping it up is where most fail. Completing your spreadsheet should become part of your trading routine. Far too many traders become complacent and tell themselves "I will do it later". Before you know it you fail to recall half of the information, thus leaving you with nothing to evaluate.
As we have said before trading is a business, one that should be archived. A staggering 90% of traders will mistakenly fail to take the time to document their progress and most importantly work on the reasons as to why a particular trade has failed. If you aspire to become a successful trader you should begin your self -assessment from the moment you execute your first trade and continue this throughout your trading life.
A self-control assessment is something that you are required to carry out before each analytical decision and trade execution that you make. Your success and longevity within the market will be determined by your ability to keep a cen- tred and clear mind before executing a trade.
More often than not, when a trader does make a mistake, they will be aware of this error and they will also understand that the aftermath of suffering was in- deed self-inflicted.
These mistakes include:
High Volume Size
Moving Stop losses
Entering far too many trades at once
You and only you are only in control of your actions within the market. Along your trading journey you will certainly meet your inner demons, despite this it is a great journey of self-development and discipline.
The temptation to execute a trade in order to 'just be' in the market will always be present! From the moment you open your laptop in the morning your mind will be racing to find your next entry fix. The transition from this train of thought to the concept of 'less is more' can be somewhat challenging yet highly rewarding for your psyche and pocket!
This enticement may lead you into entering each setup that displays itself to you, however this must be fought with good discipline. In a business such as forex, only those individuals who exercise self control shall be rewarded with positive and consistent trading results over a period of time. In order to achieve this it is crucial that you are aware of the various scenarios you may be presented with, as well as recognising when it is appropriate to enter a trade and when you should take a seat on the back bench.
In actual fact around 60% of the time, the market may not even provide you with a solid, high probability trade setup. Professional mentoring, higher timeframe analysis and the art of 'trend trading' is the utmost logical and stress free method in taking advantage of the market momentum. Once you are profi- cient in reading and analysing price action you will be skilled in recognising the indecisive stages lasting for days, weeks or even months, which are the periods when you should take a break and divert your attention to other currency pairs.
A common vision amongst traders is to someday conquer the market and be featured on the front cover of the wall street journal. A trader's dream of turning their first $5000 into $55,000,000 is one not to be tampered with. Having such a vision is not wrong, however sooner or later it will be time to wake up.
It is essential that you set yourself realistic goals. This does not mean that it impossible to one day become a millionaire, it does however mean you must first understand that a skill of great value takes time to cultivate. After all, Rome was not built overnight! Set yourself monthly goals; create an on going honest relationship with your trading journal from the moment you begin trading, do not be disheartened by the losses that may occur along the way, you should take these as a unique opportunity for self development.
Forget about the monetary figure you wish to make on a daily basis and the amount you wish to multiply your account by. To become a successful trader the only goal you will embed in your mind is the goal of consistency. Consistent analysis, consistent drawdowns, consistent pip count and a consistent positive attitude!
"Money made by mistake is like a loan with a very high default rate"
What does this mean? It means that even if you were to attempt high risk trading where you yield outrageous amounts of return, one day your luck will expire and you will see yourself losing all of the profit you have accumulated. The best lesson is dished out by time; there is an exceptionally high probability that the money you have made without the correct knowledge and skill will be returned to the market, along with your deposit. This business is a skill, a profession if you like, not a gamble.
To conclude, your trading plan must be as honest and as organized as possible. Further questions you should factor into your plan are:
How many times a day will I check the market?
What currency pairs will I be trading?
How many trades will I be in at any one time?
What is my maximum risk on my account?
What kind of trader am I?
What is my trading style going to be?