When I first began trading, I read somewhere that it was wise to keep a trading journal. So I did. Diligently, I would record my trades, the losses and the wins. It really wasn’t helping me become a better trader though. Eventually, I read the book, Tools and Tactics for the Master Day Trader. The light bulb went on, and I fully understood how to keep a proper trading journal.
To keep a trading journal, your first step is to record the details of the trade. You should include the date, symbol, entry and exit prices, slippage, commission, and most importantly, why you entered the trade.
The second step is to evaluate your trades. Record any mistakes that you may have made. Was it a proper entry? Did you sell too early? Did you panic sell? Then group those errors so that you can track them.
Finding the area where you’re making your most mistakes is step three. When I started doing this, I found that my biggest mistake was consistently taking trades without proper entries. Can you guess what the next step is?
Eliminating the mistake that you’re committing the most, is next on the agenda. Step four may take some time, but you want to fully discard this error from your trading.
Step five is to continue down the list until all your errors are eliminated.
You see, by correcting your mistakes, it leaves you with only winners. And we like winners! How do you treat your losing trades? Do you ignore them? Why not try discarding them with a trading journal. My guess is that if you’re disciplined about doing this, you won’t have to worry about finding winning trades. They’ll come naturally.