Forex trading is becoming more and more popular in the last decade and we can see an increase of people who are attracted from the possibility of making profits on the forex market. However, most of the new traders are getting into the forex market without having proper tools which are necessary for successful forex trading. One of those necessary tolls what every forex trader should have is a forex trading journal.
The basic use of a trading journal is to increase your consistency. This is done by detecting errors made on your previous trades and making sure you do not make the same mistakes again. You will want to review each setup and review your rules to make sure that you are following them correctly. Some obvious errors would be reading indicators incorrectly or setting stops and limits at wrong prices. Some harder to detect mistakes might be opening a trade too early without letting a setup to fully develop.
A complete trading journal not only contains the pertinent trade details, such as entry and exit prices or the number of pips gained or lost, but it should also indicate notes on your trade decisions. This covers trading psychology details such as your confidence in taking the trade setup, your reaction to expected and unexpected market events, your decisions midway through the trade and the rationale for those. By keeping track of these, you can gain better insight on how your emotions and mindset are influencing your trading performance.
A trading journal should be the source for change and improvement in your trading performance. Many traders without a trading journal will simply up and change something about their trading that they think or assume will give them better results. When you have a well-kept trading journal you will be able to look back and make changes to improve your trading, knowing exactly what part of your trading is not up to scratch. You will also be able to look back after making the changes and see if your performance has improved.
Once you know your system's expectancy you can act with confidence. Confidence is the key to execution. If you lack confidence you will not be able to execute your trades according to your trading plan and you will either second guess yourself or become paralyzed from too much analysis of data coming in from the market. Make a trading journal your first trading habit. It will become the key to all your good trades in the future.