Most traders are told that they should keep a trading journal. However, many of these traders are not told why they should be keeping a forex trading journal or what should be in the forex trading journal. It is important that you understand why you need to the journal and what you need to place in the journal.
Why You Need a Forex Trading Journal
The first point you have to look at is why you need to have a forex trading journal. A trading journal is a record of all the trades that you complete. Many traders assume that this is just a manual copy of the reports that you can get from your forex brokers. However, there is a lot of information that you should include in your trading journal that is not part of the broker report. Every step you take to creating a trade should be included in the journal from the charts you are using to the stop loss points that you have included.
The Market Analysis
The market analysis that you complete should be part of your trading journal. The way that you include this will vary depending on the type of analysis that you are going to do. If you are completing fundamental analysis then you have to copy the news release that you are looking at. You should also include any previous releases that are affecting the market sentiment. Any analysis that you have done will need to be detailed in your trading journal.
If you are using technical analysis then you have to keep a copy of the forex charts in your journal. The copy of the charts that you have should include the indicators that you use and the exact point when you get the trade signal. By including all of this information you can determine whether or not you are trading according to your strategy and whether the analysis you are doing is correct.
The Entry and Exit Points
Your trading journal should include your predicted entry and exit points as well as the actual entry and exit points. These points generally differ and you need to keep track of both sets of points. The predicted points are the ones that you have determined from your analysis of the market. The actual points will be what you actually used on the fore market. Your actual points may vary from the predicted points due to slippage and turns in the market.
Risk Management Points
When you keep your trading journal you need to include all of the risks management points that you are using. For each trade you have to detail the stop loss orders that you have used and the take profit orders. You should also include the risks per trade that you are taking. This allows you to determine how risky you trading is and whether or not you are sticking to the risk management plans that you have created. If you are not then you may be suffering losses in your trading and your journal will be able to tell you why.