Many experts recommend the use and maintenance of a Trading Diary because it will enhance your ability to trade the Forex Market more successfully. Basically, you will need to meticulously record the details of each trade that you enter using a format with which you feel most comfortable. Traders keep records of many different details of their trading for various reasons. Here are four of the main categories of information kept together with the reasons and usage for doing so:
1. Record the Date and Time of each trade entered
Should you then wish to examine the details of a particular trade at a later date, this information will allow you to locate all relevant information more easily.
2. Logging your feelings
Information of this type could well be the most important to record. Many traders have discovered that, if they log their psychological state of mind throughout the duration of each of their trades, then this action has enabled them to identify key behavioral patterns at a later date.
3. Record the exact entry criteria that the market price is required to satisfy for each trade.
Ideally, this should compare exactly to the one used in your trading strategy and, as such, should provide you with a reminder not to enter a trade unless you have a perfect match. You will also have records after a period of time that will allow you to analyze whether, for example, a losing trade could have been avoided.
4. Record the entry and exit prices and size lot of each trade entered.
This information can be used to determine if you overtraded or if you adhered to your money management strategy. In addition, you will be able to calculate the win to loss ratio and expectancy value of your trading strategy.
One of the activities that keeping a trading diary will help you with is the following very important task. As early in your Forex Career as possible, you must move away from a beginner’s mindset to that of a more business type one. Here your diary will spring to your aid because you can use the information stored within it to calculate important parameters of your Forex Trading Strategy. This will enable you to determine if your trading system is any good and whether it can make you profits over the long haul.
This article is part of a course intended to show how to build your own successful Forex Trading System.