Ask any successful Forex trader how he’s been successful and you’ll get a lot of different answers. Then ask them what piece of advice they would give anyone new to Forex and they’ll likely suggest that the newcomer begin keeping a trading diary.
Here’s some reasons why that’s a very good suggestion:
1 – The conditions in the Forex market are always changing and when there’s a lot of volatility it’s hard to focus on the big picture. When you keep a trading diary it forces you to slow down the manic nature of the day and write down your thoughts.
The first thing you need to do is write down all the reasons why you entered and exited a trade. This shouldn’t only include price or trends that were occurring at the time but also what you were feeling during the transactions.
2 – You’ll notice that although a lot happens in a Forex trading day very few of it is happening for the first time. In fact, as you begin to write things down in your diary you’re certain to take note of trends that are emerging in the market and in your trading.
This is a sure fire way to avoid making the same mistake twice. It’s also a good way to remind yourself of the conditions that were present when something positive happened.
3 – Keeping a trading diary sounds like a lot of work. And it may seem unnatural to start writing in a diary while you’re a high-stakes currency trader, but the benefits are clear.
The simple act of writing down your thoughts increases the likelihood that you’ll remember them and do what you can the next time to avoid that feeling or to replicate it, depending on the circumstance.
Technology has made keeping a diary even easier as you can now take notes and write on the very same computer on which you’re trading.
4 – An important thing to remember once you start keeping a trading diary is to read it. What good are all the notes and reminders you wrote to yourself if you never actually read them?
In no time at all you’ll be wondering how you ever survived without a trading diary to remind you of your trends and patterns.
That was great!