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“What's measured improves”
― Peter Drucker
Maintaining a trading journal is a smart strategy to increase efficiency and build trust in actions. Day trading performance requires high coordination and preparation level. Day traders need to go through a rigorous educational process to be consistently successful in trading.
The best tool for directing and managing the framework of a day trader is a trading journal. When you intend to become a successful trader by efficiency, trading journals will lead you to a lucrative future sooner.
Here's some of what your trading journal should document:
Before you start trading:
Your expectations for return.
Your requirements for position sizing.
Your per trade risk tolerance and tolerable drawdown.
Overall risk tolerance and correlation rules related to total portfolio positioning.
What are the results of your backtested signals or fractals in this situation?
The risk/reward ratio for each setup.
Your watch list and the reasoning for each asset.
Your entries, exits, and stop-loss levels per potential trade.
The average trading volume of each asset for the relevant time period. (add'l Screenshot of Level 2)
Calculate your risk of ruin.
During/After each trade:
Record your chart on entry.
Your entries and why, at that point, you chose to enter.
Position size and reasoning.
The stop-loss plan in case of trade invalidation.
How will you take a profit? At what level?
Did you believe in your long-term signals to make money?
Is your risk/reward ratio consistent to original? Update it now.
Record your chart on exit.
Is your trading system in line with the current market trend or your beliefs about it?
How did you feel after entering the trade? Are your expectations consistent with your original?
What did you feel when you exited the trade?
Were you happy with your trading execution?
What execution mistakes have you made?
Anything else you could have done to mitigate risk?
Anything else you could have done to maximize your trade profit?
Have you trusted in yourself to execute your plan?
Are you trading in a timeframe that is psychologically comfortable?
What was your level of stress throughout the trade?
During each point of the trade, what were your thoughts?
Go look and see what you've done at the end of each week and month, recognize common issues, and identify your strengths. Such findings will help you take advantage of your abilities and demonstrate the places where you need to focus on.
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