7 Tools To Boost Your Trading Skills And Profitability
Nearly every successful trader keeps a trading journal. They know it is one of the most powerful things they can do to influence their trading skills and, ultimately, their profitability. Most traders, however, don't understand how to keep an effective diary. Here are seven tools you can use to help put you into the realm of the profitable trader.
1. Do the numbers. Keep a notebook of your key markets. It's simply not enough just to look at charts. Write down the high, low, close, & volume of the markets you follow and your most important indicators. Not only will this practice help you keep in tune with your market, you will actually be surprised at how quickly you will hone your tape-reading skills.
2. Record all trades. You must do this. It is fundamental to a trading journal and essential to all the potential transformation that flows from it. Just do it!
3. Record your thoughts and feelings on every trade. If you want to understand your trading psychology, this is the authentic pathway. Thoughts and feelings shape behavior. Just as there are tradable patterns in the markets, there are patterns in your thoughts and feelings that prompt you to trade in a certain way. Learn these.
4. Identify your strengths and limitations. You need to know what you are good at and can rely on, as well as where you reach your current limits. Link your thoughts/feelings/behaviors to each.
5. Develop a plan to overcome your limitations. This is the whole point of your trading journal. Pick one limitation that you want to change and develop a plan to address the thoughts and feelings associated with that limitation. Look to your strengths as guidance in altering what is holding you back. Specify the steps needed to make this a reality tomorrow and into the future.
6. Track your personal performance. Your personal data shows progress and also reveals problematic areas to improve. Track your wins vs. losses and related data (e.g., average win/average loss; wins & losses in an uptrend vs. downtrend vs. trading range, etc.). Do you now see why #2 is so vital to you as a trader?
7. Make journaling a part of your routine. Write your diary at the end of every trading day. Each week, month, quarter and beyond, review your journal to identify areas to work on as well as your progress. Like a runner who can't go a day without a run, you will soon become a trader immersed in the process of self-development and profitability. You are now on the path of the master trader!
Used correctly, the trade journal helps you build not only your technical skills but your mental skills as well. Trading psychology is a key component to trading success.
Written by Sam Evans , Online Trading Academy FXInstructor.
After leaving University in 1999, Sam thrust himself into the media world, working as an executive producer and part-time presenter for London’s Capital FM. Roles in the record and film industry followed, where Sam conducted many promotional interviews and honed his presentation skills for nearly 7 years. With a strong desire to work for himself, Sam left the media industry behind and spent an intense 18 months studying to become a professional Life Coach, embarked on various property investments and gave in to his childhood fascination with the money markets by training to become a trader with Online Trading Academy. Since his graduation, he has been a full-time trader, specializing in Stock Index Futures and Forex.
Under the guidance and mentorship of some of Online Trading Academy’s best instructors, Sam himself joined the teaching roster and forged his own unique style of trading. A devoted student of the Market, Sam’s focus is on strict risk management discipline, combined with a realistic approach to understanding the true nature of Price Action. Fuelled by a passion for the markets, Sam now teaches and presents for Online Trading Academy, welcoming and helping others into the rewarding world of trading.