When you decide documenting your trade to increase the effectiveness, there is the issue of choice: a trader notebook or a trading journal. Both have some advantages and disadvantages, so let’s get on with the difference and find out which is the best one for you.
The majority of traders don’t keep a journal and don’t describe every trade in detail, but they have a trader notebook. As a rule, it’s a set of documents in Microsoft Word or Evernote online service or just a notebook. It usually contains trading ideas, thoughts, feelings, emotions, and strategy amendments.
In general, it’s a very good idea, but there are some serious drawbacks. It’s useless just to have it somewhere on your desk because the point is to look through your previous notes constantly.
A notebook of any successful trader contains only brief precise statements.
Avoid long descriptions, because it’s unlikely to be read by you one day. Instead, try to point out the most important things to memorize. So you can always remember any previous trade.
The principal shortcoming of a notebook is its insufficient information content in comparison with a journal. For example, you can’t see your trading chart, so it’s impossible to choose the most unprofitable trades, review them, and work on errors.
In a trading journal you can see the analysis of some settings such as trading data, system, logins and logoffs, indicators, trades quality, risk management, discipline, and some other trading aspects. In process of journal filling, you can conclude how to improve your trading and its return, identify your weaknesses, etc. This information is precious for a trader who wants to make a huge success.
Secrets of keeping a trading journal to read and analyze it without problems
The majority of traders delude themselves into thinking that an Excel spreadsheet is an ideal way to write a trading journal. Only if we compare it to a handwritten one. Otherwise, special programs like Tradiry are recommended.
If a trader is not very good at statistics, his handmade or downloaded from unreliable source journal is just “a garbage of unhelpful information”. I think every trader has ever heard about the importance of trading notes, and each of them has tried to take these notes. However, statistics show that 90% of traders abandon notes taking because of routine. That’s why using software to collect and analyze data instead of you is very important. And you must only download your trades and analyze the results.
So how to choose? The best choice is to have both. But not all traders have enough time to do it. Thus, a trading journal is more helpful for traders.