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The Importance of a Forex Trade Personal Journal

Many newcomers to Forex trading online study some books and courses, and then plunge into active trading. Of course, most people would advise paper trading first on a live Forex account, and this may well be part of your preparation before trading for money. When you start you may think that you will remember and learn from your trading experiences, but you will find that soon the trades become blurred into one another You really won't remember whether it was the MACD or the RSI which signaled overbought when you traded on the SMA5 and SMA6 crossover, and yes, becoming familiar with this traders' jargon is just one of the aspects you will learn.

How will you ever improve your performance? It is a fact that no one has a perfect system, and that it is in the nature of people to continually tweak what they do to try and improve. As the market will never give you truly consistent results, your aim as a trader should be to make your wins bigger and/or more often, and your losers smaller and/or fewer. To modify your system on the basis of the last trade, and in the emotion of the moment, will generally be found to be an exercise in futility.

As you may have guessed from the title of this article, the answer to this is to keep a detailed journal of your trading so that you can go back and see what has worked best in the past, and compare systems. I do not know of a successful trader who does not keep a good record of his performance, and review it periodically to look for room for improvement.

Your journal may be kept on computer or written in a diary, but I find that a quality leather bound book is best, as it encourages you to keep neat and comprehensive records. These should include not only the numbers of the trade -- your entry, price target, stop loss level, and the final result -- but also your reasoning for entering the trade, with technical indicator values, and your feelings towards it. You will find this information invaluable when you take time to look at possible improvements, as well as being extremely useful when preparing your tax returns.

There is another side to keeping a journal which is again valuable to help stay in the black in your trading career. In your Forex trading education you have probably come across the idea that psychology plays an important part in trading. Until you trade Forex live online, you may not feel that you are vulnerable to deviate from your plan because of your emotions. Once you have known the thrill and disappointment of trading with real money, you will understand much better the dangers of allowing your emotions to guide your actions.

This is where the journal becomes more important. If you are noting down your actions and feelings for each trade, you are able to identify positions in which you become likely to trade with your emotions and deviate from your trading rules, and you are also less likely to do this, as you have to answer to yourself for a bad trade on your review. I advise that you allow at least 24 hours to pass before reviewing your trades, so that you can look at them objectively and without the attachment of the emotion that you experienced at the time.

Mark Soberman of NetPicks LLC has been trading for over 20 yrs and offers free educational resources, live forex and futures signal services, as well as a new product focused on trading the forex market. http://www.netpicks.com/fxlive



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