10 Ideas to Create a Good Trading Journal

06/03/2013 6:00 am EST


Michael Bellafiore

Author, One Good Trade: Inside the Highly Competitive World of Proprietary Trading

Veteran trader Mike Bellafiore of SMB Capital shares a question-and-answer between him and a newbie trader, which others could also find helpful.

You’ve mentioned having a journal, and a detailed journal on a number of occasions. It always makes me feel guilty because I haven’t been keeping one and I don’t know what I’m missing. So I’ve been wondering:

  • What do you write in the journal?

  • When do you look in the journal?

  • Do you move journal info to a spreadsheet for analysis

I guess I can figure out the basics, like entry info, why you got in, why you got out, but I was wondering if there’s a post somewhere that dives deep into how to make and use a good journal?

Mike's Response
What makes for a good trading journal?

  1. Make it your own. This is your business. You know best what’s most important to your trading business.

  2. Identify your strengths. Build from your strengths. What setups made the most sense to you on this trading session?

  3. Crunch your trading statistics. Embrace this age of Moneyball for all sports. For your sport of trading, quantify your trading efficiency.

  4. Outline trade ideas for tomorrow. Take the info from today and use it to make money tomorrow.

  5. Be hard on yourself with your best setups that worked. Where could you have added more size responsibly?

  6. Keep a separate psychology trading journal. This is your trading strategies and executions journal.

  7. Review whether you were in the right stocks. You are only as good as the stocks you trade.

  8. Understand the market structure for the day. Most traders just place trades no matter whether it is a trend day or range day without recognition of the day’s market structure. Certain patterns work best during certain market structures. It may not have been you. It could have just been a day where those trades weren’t gonna work.

  9. Keep playing with your journal. Add, subtract, change, improve.

  10. Be consistent. A trading journal works if you do the work everyday.

You can be better tomorrow than you are today.

By Mike Bellafiore, Co-Founder, SMB Capital

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