How to Create a Trading Journal

December 21, 2021 13:23 UTC

A well-kept trading journal is an essential tool for the modern trader in order to grow and develop their skills in the financial markets, whilst also helping hold them accountable for both wins and losses.

But what is a trading journal? Why are they so important? And how can you create one? In this article, we will be answering these questions and more! 

What Is a Trading Journal and Why Is it Important? 

So, what is a trading journal? A trading journal, or trading diary, is somewhere where traders keep a detailed account of all their trades, both good and bad. But, why would someone do this? 

A detailed trading diary can help you develop as a trader in a couple of important ways. 

1. Improve Your Trading Strategies 

Firstly, keeping a trading journal helps you to monitor and improve your trading strategy.  

Being able to look back and identify where your trading strategy succeeded and where it failed will allow you to fine tune it and - hopefully, with a lot of work – turn it into a more successful and profitable system. 

It may even be the case that, after evaluating the fruitfulness of your trading strategy, you decide it best to try a completely new approach altogether. 

2. Develop Your Trading Skills 

Maintaining a trading journal will not only help you to enhance your trading strategy, but also to grow into a better and more consistent trader. 

A trading diary allows you to see where you were right and, more importantly, where you were wrong. By identifying your successes and failures, you can work on improving your shortcomings and further finessing your strengths. 

Many of us find it difficult to admit when we have been wrong, or have made a mistake. Whilst this is perfectly natural, it can hinder your growth as a trader, as learning from your mistakes is one of the most effective ways of improving any skill. By keeping a Forex trading journal which records everything, you are forcing yourself to face the truth and not be tempted to gloss over the bad in favour of the good. 

How to Create a Trading Diary 

The format of a trading journal will differ from trader to trader, but the content contained within it should be fairly similar.  

Some people may prefer to record their trading diary in a spreadsheet such as Excel, whilst others will prefer a simple note taking application. The way in which the information is recorded is not particularly important, what is important is the information itself and how it can help you develop into a better trader. 

When it comes to creating the best trading journal, generally speaking, the more information you record within it, the better. At a minimum, your trading diary should include the following: 

  • Date and Time  
  • Trading Instrument – e.g. GBPUSD 
  • Timeframe 
  • Position Size 
  • Long or Short 
  • Entry Point 
  • Stop-Loss and Target Levels 
  • Exit Point 
  • Trade Outcome (Profit/Loss) 

This is the basic data and information which you need to include in your trading journal. However, the best trading journals will go deeper than this, exploring why you did what you did and painting a broader picture of what was going on at the time. 

What do we mean by painting a broader picture? Record your rationale, what you were expecting and why. Record everything that you did in the run-up to the trade and also log your emotional state of mind. 

Was it a busy day? What did you do after you entered the trade? Did you monitor it? Or did you turn the television on and leave it for a few hours?  

Why did you close the trade? Did you get nervous? Or was the market beginning to turn? 

Asking and answering these additional types of questions will help you later down the road when analysing where you went right and where you went wrong. 

Trading Journal Example 

Below is a simple trading journal example entry to show you how this information might be recorded: 

Trading Journal Example

15 December - 19:10

GBPUSD | M15 Chart 

Target = 30 pips | Stop-Loss = 10 pips 

Entered long trade (1 lot) at 1.32254  

Bullish entry requirements of triple moving average crossover strategy satisfied 

Exited trade at 1.32504 (20:30) 

Profit = 25 pips 

It was a quiet day, so was in front of the terminal monitoring the trade for its entirety. Exited the trade short of target level based on fear of losing the pips already gained rather than any analysis or market signals 

GBPUSD kept climbing after sale and broke through original target level 

Tips For Creating the Best Trading Journal 

Before we finish, we have compiled a list of a few additional tips to help you create the best trading journal possible. 

  • Be honest! If you got distracted by something on television and forgot to exit a trade, write it down. 
  • Set aside a time at the end of each week to go through your trading journal and review your week’s activity.  
  • Take screenshots of your trading setups and save them in your trading diary; this will help you analyse your trades when going back through the journal. 
  • Include relevant information and observations about the market you are trading. For example, if you are trading the EURUSD currency pair and later the same day the European Central Bank are scheduled to make an announcement, make a note of it. You can keep track of scheduled events such as this by using our economic calendar
  • Take care to record your emotions and, again, make sure you’re being honest. Controlling your emotions is a key part of being a successful trader and having them recorded in your trading diary can help achieve this. 

Final Thoughts 

A trading journal is an incredibly useful method for beginner traders to perfect their skills. By keeping a detailed trading diary, you can learn from both your successes and your failures and, in doing so, improve your trading strategy and develop your skills. 

Another tool to help you achieve both of these things is a demo trading account, which traders who choose Admirals can use free of charge. 

Trade on a Risk-Free Demo Account 

A demo account is the perfect place for a beginner trader to learn how to trade or for an experienced trader to perfect a new trading strategy. Practise trading using virtual currency in real-market conditions before risking your own capital on the live markets! Click the banner below to open your free demo account with Admirals today: 

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About Admirals 

Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks

Roberto Rivero
Roberto Rivero Financial Writer, Admirals, London

Roberto spent 11 years designing trading and decision-making systems for traders and fund managers and a further 13 years at S&P, working with professional investors. He has a BSc in Economics and an MBA and has been an active investor since the mid-1990s