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How The Trading Journal Gives You An Edge In Your Trading

Many traders understand that a trading journal can be important to their success, but when asked to say why this is so most draw a blank. Many traders do not know why a trading diary is a helpful tool. That is why many traders don’t bother with one and may continue to struggle in their trading.

The trading journal is an effective way to improve your trading every day. Think about that for a moment. If you were able to improve – just a little each day, can you imagine how skilled you would be after, say, 90 days? What about a year? The effects compound and can help make you more knowledgeable, more skillful, and more disciplined. Over time, the work put into a trading diary leads directly to trading well.

A useful and practical tool, the trading journal can help you develop as a trader when used properly. In fact, the sole purpose of a trading journal is to help you develop yourself and improve as a trader. It helps you develop your technical trading skills as well as your mental and trading psychology skills. Wouldn’t you like to keep developing your knowledge skills and abilities on both the technical and mental sides of trading? The daily use of a trading journal helps you do exactly that.

Technical Skills

When using a trading journal effectively day after day, you are working systematically on your technical skills. You are looking at the markets you trade and studying them and their behaviors. You note market developments. As you work with your journal, significant, telltale market patterns will become apparent to you. Your ability to read the action of the market will improve. And, whatever technical indicators you use – whether it is ADX, a stochastic, RSI, etc – when you record the numbers each night as you should when keeping a journal, you begin to pick up on their subtleties and nuances. You become much more skilled at reading them. You learn to anticipate trade locations and what the market behavior should look like when in such a location. The trading journal is an effective tool in helping you systematically build and extend your technical abilities.

Mental Skills

It is also very helpful in building your mental and trading psychology skills. By keeping a journal, you learn about yourself, which may be the greatest benefit. You will soon clearly see mental and emotional patterns that play out in your trading. You will identify your strengths and the things you do well. You will also identify your limitations. These may not always be so easy to see without the reflection created when making journal entries. The trade journal helps shed light on what may be outside the trader’s awareness. And, if you chose to turn a limitation into a strength, the trade journal helps you set goals and mark your progress. Recording your progress, you will see your development unfold. The journaling you do as you work on your own development brings about the internal confidence so necessary to trading effectively. Keeping a journal is one of the best ways to develop a true trading edge.


Written by Gary Dayton, Psy. D.

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