Lessons › Why traders lose › Keep a trading journal
World 11 · Why traders lose · lesson 28 · level 2
Keep a trading journal
A trading journal has four parts: the plan before you click, an honest reason tag, how you felt in one word, and the result in R.
In one line
How did your last twenty trades go? If you remember a few and guess the rest, a journal replaces the guess.
Explained simply
A trading journal is a notebook of your trades, and each entry has four parts. First, the plan, written before you click: the date, the price you get in at, your stop (the price where you give up) and your size. No stop means no trade. Second, the reason, as an honest tag of a few words, like "my setup" or "bored". Third, how you felt, in one word, like calm or rushed. Fourth, the result in R, the amount you risked. Risk $100 and make $200: that is +2R.
A worked example
An example: you risk $100 on a trade. Make $200, and the result is +2R ($200 ÷ $100). Lose the $100 at your stop, and it is −1R. A trade that risked $200 and made $200 is only +1R, so R shows which trade did better, whatever its size.
Mistakes to avoid
- Filling in the plan after the trade instead of before you click.
- Writing a nicer reason than the real one, like "my setup" for a bored trade.
- Skipping the feeling column because it feels silly.
- Writing results only in dollars, so big and small trades can't be compared.
Check yourself
In a trading journal, what is R?
The amount you risked on the trade. R is the amount you risked. Results in R let you compare every trade, whatever its size.
You cannot fill in the stop price before you click. What does that tell you?
No trade: you have your answer. The plan is written before you click. No stop in the box means no trade.
Why write how you felt, in one word, for every trade?
It can warn you about tilt before your balance does. Tilt is trading while upset. A run of "rushed" or "angry" shows in this column before it shows in your balance.
You took a trade because you were bored, and it won. Which tag do you write?
Bored. Tag the real reason, win or lose. Later you add up each tag, and only honest tags show where the money goes.
Trade A risked $100 and made $200. Trade B risked $200 and made $200. Which did better, in R?
Trade A: +2R against +1R. A made twice its risk (+2R); B made once its risk (+1R). Dollars hide this, and R shows it.
Goal of this lesson: Log your next trade with all four parts, and write its result in R.