Hey…, come over here, let me let you in on a little secret of mine.
I hate journaling with a passion.
When I even mange to keep one, it takes great effort to go through it
Now, I know you are wondering.
How did this dude learn how to trade without keeping a journal?
I never did.
I had to learn how to grow affection towards keeping a journal of my daily trading activities in the market, and a few years down the line, I was happy I did so.
So, my question to you is:
Do you keep a trading journal?
If YES, you have been exonerated.
If NO, this article is for you my friend.
Before we go any further into this article, let’s agree on something.
Journaling is very important, and if you are still scratching your head or rolling your eyes at me, then I may have to give you some hard facts.
Top athletes, scientists, architects, and a host of other professionals in the world, keep records of their day to day activities as they make progress in their vocations.
The reason for this is NOT because they love to punish themselves with hard work, HELL NO..
Why these professionals spend countless hours journaling and going through what they have journaled is simple:
The need to constantly sieve away bad habits or processes that hamper their path to greatness or new discoveries.
If they don’t journal their work process, then how do they measure their progress, and how do they get to know what’s working and what isn’t?
Once you get to know what works through journaling, then you have an opportunity to scale up your trading performance over time.
Since we have finally agreed on the importance of keeping a trade journal.
Let’s go a step further.
In order to transition from a struggling trader to a profitable trader, you need to embark on a trade journal sojourn.
Your journal will reveal:
- The best time frame you trade in.
- Your favorite currency pairs.
- Your favorite trading session.
- A trading style that best suits you.
- Days of the week you trade best
1. The best time frame that suits you:
When it comes to picking a time frame for trading, there is no one size fits all. A time frame that suits you, may not be good for another trader.
However, there are some important things to note when picking a suitable time frame.
- Your daily schedule: If you are a trader who still maintains a typical 8 to 5 job, I am sorry you may not be able to trade off the 5 minutes to 1-hour time frame.
The reason is simple:
Trading off lower time frames requires more time to monitor your trades, since every candlestick generated on the screen, is greatly influenced by the time frame you are trading from.
For example:
It will be impossible for Mr. John to take trades from the 1-hour chart, if after he resumes work, he most likely won’t have access to his devices since he is in the theatre operating on a patient.
You will all agree with me that he is better of, learning how to trade from the 4 hours or daily time frame in order to become a more successful trader.
- Your personality: Our personalities when it comes to picking a suitable time frame to trade from matters a great deal.
While you have some individuals who enjoy a fast-paced analysis and trading style, other traders enjoy a more laid back approach to trading the market.
Your daily schedule and personality are important factors that determine what separates one trader from the other when it comes to picking a suitable time frame.
A well-documented trade journal over time, will reveal the time frame that best fits you.
2. Best currency pairs that suit you:
There are over 40 currency pairs on any trading platform. Each has a personality attached to it. Being able to flow with a particular currency pair has a lot to do with how much time you have spent studying it and how well you flow with it.
Example of some of the major currency pairs are:
GBP/USD
EUR/USD
USD/CAD
etc.
The major currency pairs are known to have a more uniform movement during trading sessions, hence, are a lot easier to master by most new traders
By keeping a trade journal, and studying a handful of the major pairs, you will discover that your trading affinity towards some currency pairs is more compared to others.
And just like the story of the Excalibur and King Arthur goes, The currency pairs you have always been destined to trade, will find you.
3. Knowing what trading session you trade best:
There are two major factors that could be a determining factor as to which trading session works for you:
- Your current location and
- Your employment status
It is widely known that the market is much more liquid during the London session (7am – 5pm GMT).
However, that does not mean that you cannot trade other market sessions.
- Your Location: If you are located in a country under the Greenwich mean time (GMT), you have the opportunity to trade the most liquid session in the market.
Alternatively,
you could move to a country that shares the GMT, in order to trade the London session.
On the other hand, If you are disadvantaged as regarding your location, you have two choices:
- You either learn how to master the trading session your current location falls under or
- Risk becoming a vampire, who stays up late at night, to make money trading the London session.
Employment Status:
If you are employed and your job is the type that takes most of your time, you have two options if you really want to trade.
- You either trade the higher time frame (4 hours and Daily) or
- You trade other market sessions (London session, New York sessions or Asian session)
Keeping a trade journal will show you the trading sessions that best suits you.
Furthermore, keeping a detailed trade journal, will reveal a profitable trading style that can accommodate both your location and employment status.
4. Your best trading days of the week:
Call it a superstitious belief or a self-limiting belief, the truth is that, if you go through your trade journal, you will notice that some days have a higher winning rate than others.
Once you know those days, you start reducing your activities in the market on such days.
Personally, I try to abstain from taking trades on Monday’s and Friday’s. It took me time to realise this, but when I did, it affected my trading performance positively.
5. Trading Style that best suits you:
It is natural for every new trader to try his/her hands on several trading systems, but while doing so, it is much more important to journal your trading performance on each of the trading systems and how best they fit your personality.
One thing you should know as a new trader is:
In forex trading, there are a gazillion trading techniques.
That said…
You don’t have to learn every trading technique in order to become a profitable trader. You only need to master one trading technique to become a profitable trader.
– Fillipo Saga
Out of the myriads of trading techniques available to traders, we can compress them into three different types.
- Discretionary trading: A trader who develops a feel for the market and uses basic tools like trendlines to determine the flow of price.
- Mechanical trading: A trader who combines several indicators and establishes a set of rules that determine exit or entry point in the market and
- Robotic trading: Involves the trader learning how to make use of a trading software to pick viable trades in the market
Each of these trading styles has their advantages and disadvantages, which will be discussed in another article.
However, the most important thing to note is knowing which style of trading you prefer. For most traders, this can only be revealed with a detailed journal, showing the performance on each type of trading technique.
For those still trivializing the efficacy of keeping a trading journal, remember…
A trade journal is the mirror that reflects what you are doing wrong in the market. The larger the mirror, the better the reflection of your bad trading habits
– Fillipo Saga
Have you ever used a trade journal? if you have, has a trade journal ever been useful to you.
If so, in what way?
Kindly leave a comment below
