14 Dec 2017
Keeping an Online Trading Diary
Unless you love recording data or your job as an accountant - record keeping may be the most boring part in running any business. It is however, one of the most essential elements since it allows the business owner to analyse the various transactions and improve them to deliver the desired results. The absence of records will keep you guessing where things went wrong and what should be done to improve the situation. As any serious trader will tell you, trading is like running your own business. So, if you are trading online, it is prudent to keep a detailed record of all your transactions so you have a full picture of what happened. A diary of all actions can help traders analyse their strategy, besides aiding in remedial action or a revision of the strategy. The reality, however, is that very few traders record and review their trades because many platforms automatically keep records for them. Unfortunately, often not in enough detail which is why keeping your own diary of online forex trades may be very key to your success.
Benefits of Maintaining an Online Trading DiaryFor traders who engage in multiple transactions in a month or a week, it is difficult to keep track of all transactions and their outcomes. Maintaining an online trading diary ensures that they do not miss out any transaction. Again, maintaining a record will ensure that we can compare the actual transaction with our desired motive and discover the cause of deviation, if any. An easy way is to keep a screenshot of all trades in a day with personal comments placed on the chart itself. However, a proper and systematic record of the screenshots is also essential. Keeping a proper record of transactions ensures that traders work in a methodological way and can plan out the investment of their funds in the best possible manner. Random and impulsive trading can be restricted if a trader is aware of their investment limits and available funds. Absence of records may make the trader exceed their limits and invest a larger amount than they had already planned to.
How to Maintain an Online Trading DiarySeveral traders avoid maintaining an online trading journal because they believe it to be a boring or, in some cases, too cumbersome and complicated procedure. But, even a simple record of entries with their details is adequate to keep one’s trading transparent and methodical. Let’s look at the things that need to be mentioned in the diary to develop and implement successful trading.
- Mentioning the reason for carrying out a trade is important because this will help in analysing the outcome later. For instance, if a trader makes a trade on the basis of a specific recommendation or out of sheer curiosity, the outcome and its recording will help in better decision making in future.
- Keeping a record of the target price and stop loss and profit points will ensure that traders work in a planned manner. By writing down all the details of a trade, the trader can plan for any contingency. Recorded details also allow forex traders to review and learn from these actions to be more disciplined in the future.
- Forex trading is erratic and quite often the outcome of a trade differing from what was envisaged initially by the trader. Recording of all details allows traders to compare the planned with the actual scenario and aids in better decision making for future trades.