Journal Analysis

By Rochon, Diane | Modern Trader, August 2000 | Go to article overview

Journal Analysis


Rochon, Diane, Modern Trader


Trading journals can reveal much more than the number of winning vs. losing trades you have experienced. Analyze your journal and you will find your own distinct trading patterns.

Trading decisions for day-traders often take a split-second. You wouldn't take a trade that didn't warrant action -- or would you? Writing daily in a trading journal can help determine if you are acting on trades that have proven themselves as solid risks. You also may find patterns in your trading that reveal what you are doing right or wrong.

Both day-traders and longer-term players need a proven trading strategy or methodology that includes target levels, solid execution rules and a strong money management plan. But they also need to monitor their trades as well as their actions. While most professional traders either have mentors, trader managers or clients to guide them (or to answer to), individual traders must regulate themselves. A trading journal can put your track record in an objective light, thus allowing a clearer picture of your strengths and weaknesses.

By having an objective viewpoint of your actions, you effectively are getting in touch with yourself. And although many traders don't like to talk about the psychological aspects, if you don't address them, you likely won't be a trader for very long. Successful traders are well aware of their strengths and weaknesses and choose to look inward for solutions -- that is, they don't blame the market, someone else's analysis or a "bad" fill.

Reading between the lines A journal can reveal trading and, yes, even psychological patterns. The point of a trading journal is not to find out why your parents liked your brother better, but rather to help you find both the profitable and unprofitable aspects of your trading. George Kleinman, president of commodity.com and author of Trends in Futures newsletter, notes, "For years I've kept what I call a 'trade plan.' I just write down mistakes and triumphs that I've had in the markets for the purpose of trying to avoid the mistakes in the future and trying to repeat the triumphs."

Several patterns may be discovered when reviewing a trading journal. If trade specifics are recorded, you may find time periods that exhibit an inordinate amount of winning or losing trades. Another type of winning or losing streak that can be revealed is length -- some traders may not be able to keep a winning streak going for more than five days, while others can go on for weeks.

Often, trading managers will review the winning and losing patterns in a trader's track record to determine the trader's "pain threshold." This is a crucial aspect in understanding your trading strengths and weaknesses. If your journal is honest and complete, you should be able to determine how many losing trades in a row it takes before you spiral out of control. For some, it may only be three trades, while others can handle a three-month long losing streak.

Patterns also can be found in the markets you trade. For example, do you have more success trading energy or financial futures? Perhaps you'll find that currencies' unique idiosyncrasies escape you, or grains characteristics are more indigenous to your brain.

Dear diary To get the most out of it, a journal should include trade specifics. This means recording all of your trades and their entries, exits, target levels, risk/reward ratios, specific reasons for taking the trade (technical or fundamental) as well as the results. This is a lot of writing -- particularly if you are day-trading -- but the upside to keeping a daily journal is that its time-consuming factor can minimize the chances of overtrading (yet another pattern that can be discerned from a journal).

You may even want to include a synopsis of any discussions you've had about a trade. This could lead to an important discovery about how you deal with others' comments or advice. Do you back down and exit the trade when someone disagrees with your position? …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Journal Analysis
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.