Lessons › Trading psychology and process › The trading journal

World 9 · Trading psychology and process · lesson 6 · level 3

The trading journal

Your journal is your coach: it remembers what you did and why, even when you would rather forget.

In one line

Your memory says last month was 'about even'. What would your journal say?

Explained simply

A journal is like a game replay for your trades. Memory keeps the exciting moments and forgets the boring mistakes, but the replay shows everything. Watching it helps you see what you really do.

The lesson

A useful journal records the date, market, setup, entry, stop, exit, size, result in R, the reason for the trade and how you felt. Screenshots before and after the trade make reviews much faster. Over time the journal shows which setups and habits make or lose money, which memory alone often gets wrong. Log every trade, especially the losers, because they hold the most useful lessons.

A worked example

Illustrative example: a stock trade has entry 250, stop 245 and exit 260. The risk per share is 250 - 245 = 5 and the gain is 260 - 250 = 10, so the result is 10 / 5 = +2R. A forex trade risks 20 pips and hits its stop, so it scores -20 / 20 = -1R. Written in R, the two trades compare fairly even though the markets and sizes differ. Over a month of 3 wins at +2R and 9 losses at -1R, the journal shows 3 x 2 - 9 x 1 = -3R, even though memory said 'about even'.

The same idea at four levels

1. Beginner. A journal is a written record of every trade you make.
2. Foundation. Record the numbers: date, market, setup, entry, stop, exit, size and result in R.
3. Intermediate. Add the why and the feeling: your reason for the trade, one emotion tag, and before and after screenshots.
4. Advanced. Results in R let you compare trades of different sizes and markets fairly, because a +2R win means the same thing on a small stock trade as on a big forex trade.
5. Expert. After 30 or more entries, group trades by setup, market, time and emotion to find where your edge and your leaks really are, then write one rule to fix the biggest leak.

Mistakes to avoid

• Recording only money won or lost, without the result in R or the reason.
• Skipping entries after losing trades, which hides the most useful lessons.
• Writing entries days later from memory instead of right after the trade.

Goal of this lesson: Keep a journal that records the numbers and the thinking behind every trade.