Trading journal can help any trader to understand how he has performed over some specific periods in conducting trades. However, while making trade execution decisions further, a trader should try to recognize whether his performance is well going or not. This is how a trader can make investment decisions according to his strength and weaknesses.
Trading journal place important role in the improvement of trading performance. In fact, it is the main source of information for analysis. It helps trader to understand his mistakes and their consequences. That is way trading journal should contain all information necessary, such as: - date and time (time is important to understant the best time for trading), - instrument (helps to figure out the instrument generating mostly income or loss), - strategy used (to be able to compare the performance of various strategies), - entry point - stop level - take profit (potential level) - actual exit point - reasons to exit - results - summary and conclusions. Some of the traders start to record too much information that makes this process extremely time consuming so they suspend it at all just in a few weeks or even days. That is why it is important to define the scope of information that would be useful for analysis. Another efficient approach to analysis is backtesting on historical data. It helps trader to understand the way the strategy would perform in long term perspective and also to figure out the impact of trader`s psychology on the trading outcomes. Nowadays it is quite easy to perform backtesting using special tools like Forex Tester allowing to check trading system or idea just in a few minutes that is important to save time and reduce efforts spent on analysis. Sometimes it is important to compare the results provided by backtesting system with actual trading results to find mistakes and ways to exclude them. That is why both recording trades and backtesting are important for each trading looking for the improvement of his trading performance.
