There is a common misconception that trading is a gamble and that there is no skill or expertise necessary to be successful. This could not be further from the truth and careful analysis of stocks, data, statistics as well as keeping track of trading profits can mean the difference between success and failure.
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In trading, each person has a different strategy that may work for them. What works for one person, may not necessarily work for another. In your trading journal, it is important to keep the following in mind:
1. Record Everything
Keep track of every single trade that you make, no matter how small or large. Record the duration or period that you held on to the trade as well as changes in the share price during this period. Most importantly, record the profit or loss that you made from the trade as well as the percentage that you gained or lost from each specific trade.
Simply recording your trading information has no benefit if you do not consolidate the data for analysis. Depending on how often you trade, you can consolidate on a daily, weekly or monthly basis. There are different methods that you can use to consolidate your records and you should find one that suits you. Review your consolidated data regularly.
3. Make Notes
Once you have reviewed your data, you will see that you can learn something from every trade that you make. Make a note of what you learned from each trade so that you can repeat successes and learn from mistakes or trades that didn’t make a profit. Remember that you can learn just as much from a small trade as you an from one that resulted in big profit or loss. You are also more likely to learn from your losses rather than your profitable trades.
It is easy to become lost in the profit and losses of each trade and it is, therefore, best to look at the bigger picture and gain some perspective on your trading strategy. Don’t take each profit or loss personally and be objective about your overall gains and losses. At the end of the day, if you are making a profit over all your trades for a specific period of time, you are succeeding. However, there is always room for improvement and greater success.
5. Develop A Strategy
It is also important to implement what you have learned in developing an overall strategy. Your strategy should have some fundamentals as well as dynamic factors that can be tweaked and changed as your strategy develops. You can design a strategy for each specific share, shares that behave in the same manner or even your entire share portfolio.
You may want to invest in a good trading tracking, recording and analysis software package that will assist yours in keeping a journal and using it to your benefit.