What is a trading journal: what data do I need to analyze?
We found it important to analyze the trading diary by pulling out the following important data:
- Screenshot comparison
- Profitability of profit and loss and RR
- the mistake you are making
- If you deviate from your trading plan
- Your emotions throughout the trading process
- Post-trade information
- Missed trading opportunities and why
Let’s discuss each in detail and see what you can get from each.
screenshot analysis
inaccurate analysis
Your initial guess about the price range may be wrong and cause you to make bad trading decisions.
For example, you realize that the support or resistance level you identified is actually slightly lower or higher than you originally thought.
Recognizing this can improve your analytical skills and make you more cautious when looking for key trading zones.
best setup
Comparing winning and losing trades through screenshot analysis can reveal patterns and differences in trade setups.
Carefully study the candlestick formations and price movements leading up to the entry points for both winning and losing trades…
You should look for similarities or distinct features in the winning trade setup that were not present in the losing trades.
This kind of analysis will help you learn how to trade successfully.
As always, it is important to ensure that the sample size is large enough to make this analysis reliable.
Avoid hastily adjusting your trading strategy based on a single instance of success or failure.
Analyze profit and loss and size of losers vs. winners
Analyzing profit and loss (PnL) may seem simple, but there’s more to it than just calculating your winning percentage.
I want you to understand that in most cases, winning percentage doesn’t mean that much.
“Reiner, wait a second…Does it matter if I don’t win?!”
Well, winning percentage itself does not necessarily mean profitability.
You should consider whether you can make more money on winning trades than you lose on losing trades.
Let me show you…
Trading results table:
OK, here’s a small sample size of 7 deals.
Even if your win rate is as low as 28%, you can still see positive results by focusing on risk management and maximizing your profits on winning trades…
In this example, a $10,000 trading account and a 2% risk per trade would result in an increase of $560.
While this scenario may not be sustainable with such a small sample size, it highlights the importance of prioritizing quality over quantity of deals.
Analyzing profit and loss data allows you to identify patterns such as losing streaks and the need to minimize losses, which are key to improving and strengthening your trading system.
Identifying and eliminating trading errors
Early on in my trading journey, I realized the importance of reducing the number of mistakes.
Every mistake, whether it’s a small mistake or a major setback, cuts into your bottom line.
However, making mistakes is part of the learning process, and it’s okay to admit your mistakes.
What I’ve learned from experience is the importance of focusing on only one or two mistakes at a time.
Instead of trying to fix everything at once, fix one or two over the next month.
For example, if I’m constantly overtrading or not following risk management rules, I’ll look at that.
This way, you can work on making good trading habits a part of your daily life.
Then tackle the next problem.
This step-by-step approach allows you to make meaningful progress without getting overwhelmed or overextending yourself.
Over time, this method has proven to be effective in improving my trading process and making it more stable and profitable.
Analysis of failure to follow the trading plan
Thinking about times when you failed to stick to your trading plan can help you understand how you make decisions.
Try to understand the real reasons for your actions…
Have your emotions gotten in the way of your rational thinking, causing you to deviate from your plans?
Take a step back and honestly assess whether you are sabotaging the system.
By recognizing these moments and looking for the root cause, you can develop ways to prevent similar behavior in the future and become a better trader as a result.
Track sentiment during trades, not just before and after trades
On longer time frames, large market fluctuations can occur during the course of a trade and are subject to sentiment.
You may be tempted to exit the trade early for a small profit or a small drawdown.
These emotions can greatly influence decision making and lead to poor trading results.
That’s why it’s important to track your emotions before, during, and after a trade.
Consider taking quick notes of your feelings and thoughts as the trade progresses. But don’t jump into action right away.
This approach allows you to openly view your emotions without interfering with your trading system.
It helps you stay disciplined and follow your trading plan, which ultimately allows you to improve your overall trading.
It may be possible to analyze what happened after the termination
We highly recommend that you analyze your trades a few days after you close them.
why?
First, over time, your emotions will move away from trading.
This means you can clearly and realistically assess the actual performance of your trades.
Secondly, this analysis allows you to see if there is potential for improvement in any area of your trading strategy.
For example, if you review 10 trades and find that in 8 of them the price continues in the direction of the trade after the trade closes…
…This is a pretty strong indication that there may be room for improvement in the exit strategy.
Armed with this approach, you can adjust your profit taking and perhaps even run your winners further before exiting.
Loss of trading opportunity
Documenting these opportunities in your trading diary is also a valuable habit.
Once you’ve identified the trigger for your missed entry, think about what was going on at the time.
Were you away on personal business?
Or is it simply a missed opportunity? (it happens)
Knowing why deals are missed can help you improve your processes and make better use of your time.
This will help you see if your strategy is correct across different pairs and time frames.
Thinking about why you missed out on these deals can also help you understand deeper issues such as fear, doubt, and laziness.
You can figure out how to deal with these problems and follow your trading plan with more discipline.
After all, it is a motivation that will serve you well and remind you how important it is to remain alert and disciplined when trading.