You might think that why it is important to keep a trading journal, as every broker gives you real time records of all the trades you made. You could even argue on that as broker record contains margin usage, real buying power and the profits & losses for every trade you made. I know you’re right but still we require maintaining journal. That’s what this article is all about. Here we are going to discuss why one needs to maintain the journal even though he can get the records from the forex broker.
- Planning Tool
A good trade journal not only provides you accurate data but also helps you with the plan for the next trade. It allows you to double check every trade before you execute it by setting parameters regarding how much risk you can bear on that trade, when exactly you need to enter the trade and how you’re going to manage the trade as it goes further. In simple words, it can be said as a way to record your thoughts in numbers and accomplish the wishful thinking into reality. It is the basis for the planning of your trade.
- Historical record
After some time, the trading journal will help you with historical data. It will not only help in summarizing the trades but also gives you information regarding the effects of all of your trades. In other words, we can say it as data base for the personal performance that gives you opportunity to look back and check your trading record and based on the records you can make plans for the future trades. Depending on how analytical you could be, you can pick out great deal of information and can apply that in trading to beneficial results.
- Methodology verification
It is an important thing that a trading journal can help you with, it can verify your methodology over the time. As a result you would be able to see how well your system performs in the volatile market conditions. It help you to get the answers for the questions such as how did your system performed, timeframes and the impact of the trading decisions you’ve made.