Keeping a trading journal

If this course had to be reduced to one instruction, it would be: keep a journal. Every study of surviving retail traders and every honest professional says the same thing. The journal is where you find out what you actually do, as opposed to what you think you do, and the gap between those two is where most losses live.

What a journal is not

It is not your broker's trade history. That tells you what happened. A journal tells you why, and what you were thinking, and whether you followed your plan. It is also not a diary of feelings, though feelings go in it. It is a dataset about one trader, you, that you will analyse.

The minimum fields

For every trade, record:

Field	Why
Date and time of entry and exit	To find time-of-day patterns
Instrument	To find which markets you actually do well in
Direction (long/short)	Many traders are much worse on one side
Setup name	Which of your written setups this was; "none" is a valid and important answer
Planned entry, stop and target	Written before the trade
Actual entry and exit price	Compare to planned; the difference is your slippage and your discipline
Size and dollars risked	Risk = (entry minus stop) times size
Result in dollars and in R (multiples of the amount risked)	R normalizes results across different position sizes
Followed plan? (yes/no)	The most important column
One sentence: why this trade	Forces you to have a reason
One sentence: what you would do differently	Forces reflection

"R" deserves a word. If you risked $50 (the distance from entry to stop, times size) and made $100, that is +2R. If you lost $50, that is -1R. If you lost $80 because you moved your stop, that is -1.6R, and the journal should say why. Thinking in R lets you compare a trade in a $3 stock with a trade in an index future, and it stops you from judging trades by dollars, which is how people end up oversizing.

A screenshot is worth a paragraph

Attach a chart screenshot at entry and at exit, marked up with your entry, stop and target. Weeks later, you will see things in the picture that you did not see in the moment: the entry was in the middle of a range, the stop was at the obvious low, the target was past a level that had held three times. Screenshots make patterns visible in a way that numbers alone do not.

The weekly review

The journal only pays off if you read it. Once a week, at a fixed time, go through the week's trades and answer:

How many trades followed the plan? What percentage?
What was the result of the plan-following trades versus the others?
What was the average winner in R? The average loser? The win rate?
Which setup, market, time of day or direction did best and worst?
What was the one recurring mistake?
What is the one thing to change next week? (One. Not five.)

Almost every trader who does this finds within a month that their unplanned trades are a large net loss and their planned trades are roughly break-even or better. That discovery alone, removing the unplanned trades, is the single largest improvement most beginners ever make, and no indicator will find it for you.

Feelings go in, too

A short note on emotional state at entry ("bored", "revenge after last loss", "confident, setup was clean", "afraid of missing it") is one of the most predictive fields in the whole journal. After 50 trades, sort by that field. You will find that certain states are expensive. Then you can build a rule: no trades when the note would say "bored" or "revenge".

Key idea: A journal turns your trading into data about yourself. The single most valuable finding it produces, for almost every beginner, is that trades taken outside the written plan lose money and trades inside it do not. You cannot see that without writing it down.

Tools

A spreadsheet is enough and is what most professionals started with. Dedicated journaling apps exist and can import broker data automatically; they are convenient and some are free. Whatever you use, the requirement is that you will actually fill it in, every trade, same day. A perfect system used half the time is worse than a plain spreadsheet used every time.

Common failures

Journaling only winners. The losers are the data.
Filling it in a week later from memory. Memory is a novelist.
Recording the plan after the trade, when it is easy to make the plan match what happened. Write the plan first, ideally in the journal, before clicking.
Never reviewing. A journal that is never read is a diary.
Reviewing daily and changing the strategy daily. Weekly is enough for the review; monthly for any strategy change; and never on a single trade's result.

Try it: Create a spreadsheet with the fields in the table above. Add the last five trades from your paper account, including a screenshot for each. Fill in "followed plan?" honestly. Then, before your next trade, write the planned entry, stop, target and reason in the journal before you place the order.

Recap

A journal records why you traded and whether you followed the plan, not just what happened.
Log planned versus actual prices, dollars risked, result in R, plan adherence, reason and reflection, plus screenshots.
Review weekly with a fixed set of questions; change one thing at a time.
The biggest single improvement for most beginners is discovering, in the data, that unplanned trades lose.
Fill it in the same day, every trade, losers included; write the plan before the order, not after.