Do you keep a trade log? Over 60% of traders admit to not keeping a trade diary. I understand why they don’t, it’s a chore and who wants to remind themselves of those trades they would rather forget about after all? But keeping a trade log can be a real asset to any trader. Documenting trades taken and why can act as an arresting mechanism to ill-disciplined trades.
Just like having to justify to your partner at the end of the day or week why you thought it was a great idea not to use a stop loss, having to document it also can help from making those decisions. But the real benefit is in the analysis. Doing a regular review can flag up any ‘style drift’ that could be happening.
For example a trader may not realise that over time, they start to drift from a prior style that was profitable and are now trading in a slightly different way. Having a trade log would flag up any changes in trading style and whether they are affecting performance.
Reviewing a trade log can also help improve performance in other ways. It can help identify if profits are being taken too soon or if stops are too tight. It will also identify if you’re susceptible to over trading or any number of bad trading habits. What about grading the trades out of 10? Could that help with sticking with only the very best setups?
I even spoke to a trader recently who logs his emotion at the time of taking the trade. He identified this as a powerful tool in assessing his mindset at the time of trading. All in all, using a trade diary can be a very important performance tool. Professional athletes have performance monitoring and regularly assessments, shouldn’t we as traders?
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Over to the markets, a couple of weeks ago I discussed the AUD/USD and the resistance it had hit on the monthly chart plus the potential for trend-line breaks on the daily timeframe. It has now broken those trend-lines and is nearly back to old prior resistance which could now act as a support zone. I think there’s some probing of that support area to come but will be watching for bounces. If it does bounce, I will be looking for shorting opportunities once more…. Have a great week
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