Successful traders will agree that keeping a trading journal is one of the crucial factors in achieving forex trading success. Not only does a good trading journal contain the trade plan or profit and loss components, it should be complete with risk management plans and psychological details. Here are the four important parts of a complete trade journal:
The first part is all about analysis. Some traders rely on technical analysis while others prefer fundamental analysis. A good number also make use of both, along with sentiment analysis. This part should contain your bias for the currencies and why, as well as the reasons for your entry and exit points. It should have a clear explanation as to why you predict the pair will behave a certain way.
The second major component focuses on risk management. This aspect is important since you might encounter losses if your trade idea is incorrect. After listing down the reasons why a currency pair will rally or sell off, you should also be ready to limit your losses in case it behaves differently. This component should also have the reasons for you to exit the trade early or cut losses. It should mention the technical levels at which your trade thesis is proven wrong and how much of your account are you willing to risk on the idea.
The third part is all about the time frame. How long do you plan to hold on to your trade? This can depend on the type of trading style you have. If you're a day trader, you should specify until what trading session you plan to keep your trade open or if you will have any reason to close early. If you're a swing trader, you can determine how many days or weeks you plan to keep your trade open or if there are any market changes that could lead you to exit before that time frame.
The last major component contains trade psychology updates. You don't have to list down all your emotions at once since this could vary while your trade is playing out. Update your journal if you are feeling confident or uneasy about price action or if you are unhappy with the trade decisions you made. This is helpful in managing emotions in your trading endeavor.
The first part is all about analysis. Some traders rely on technical analysis while others prefer fundamental analysis. A good number also make use of both, along with sentiment analysis. This part should contain your bias for the currencies and why, as well as the reasons for your entry and exit points. It should have a clear explanation as to why you predict the pair will behave a certain way.
The second major component focuses on risk management. This aspect is important since you might encounter losses if your trade idea is incorrect. After listing down the reasons why a currency pair will rally or sell off, you should also be ready to limit your losses in case it behaves differently. This component should also have the reasons for you to exit the trade early or cut losses. It should mention the technical levels at which your trade thesis is proven wrong and how much of your account are you willing to risk on the idea.
The third part is all about the time frame. How long do you plan to hold on to your trade? This can depend on the type of trading style you have. If you're a day trader, you should specify until what trading session you plan to keep your trade open or if you will have any reason to close early. If you're a swing trader, you can determine how many days or weeks you plan to keep your trade open or if there are any market changes that could lead you to exit before that time frame.
The last major component contains trade psychology updates. You don't have to list down all your emotions at once since this could vary while your trade is playing out. Update your journal if you are feeling confident or uneasy about price action or if you are unhappy with the trade decisions you made. This is helpful in managing emotions in your trading endeavor.
About the Author:
Want to find out more about forex trading, then visit Airin Haynes site on how to choose the best forex strategy for your needs.
No comments:
Post a Comment