Tips for analysing your trading journal
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  1. #1
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    Tips for analysing your trading journal

    Hi traders! I want to share some useful principles that will help those who journal their trading. By the way - who is not jouraling yet, believe me - it's very valuable habit you can develop in your trading.
    Trading journal can be divided on 2 parts: Narrative part and statistical part. Narrative part of your jounal contain your thoughts about market, about your trading, about your current psychogical state, some refections about your strategy and trading plan. As for statistical part of trading journal, it comes to analysing numbers. If you know what is normal for your trading, you can compare your current performance with the benchmark. For example, if you know that over the time you were making 5-10 trades a week (and that was ok for your trading plan), but now you are trading more frequently, it may be the sign of overtrading.
    For analysing your journal from statistical perspective, I would advice you to keep an eye on the following parameteres:

    1. Frequency of trades:

    Overtrading can be more harmful than undertrading, but both tendencies are harmful. Whereas undertrading (when you do less trades than usually) "freezes" your equity curve, it also has nothing to do with profitable trading. Trading involves risk taking (concious risk taking, of course), and if you don't take risk, you will not probably have gains.
    But, of course, if reduced number of trades occurs as a result of optimization, when you remove "junk", it is a good sign. If you increase your patience and improve your trade selection, it should be consideres as a positive sign for your trading.
    So, parameter itself can't tell anything about your performance - you should know what you have done to achieve this parameter. Consiousness and honesty is the best companion here.

    2. Aggressiveness of trading:

    Also, there is second parameter that makes sence - aggressiveness. If we analyze frequency of our trading, we may notice that trading activity is distributed in non-linear mode. There are days when we trade more, there are days when we trade less. The goal is to understand what triggers us to trade more/less and track actual correlation between aggressiveness and profitability. If there is no correlation (say, frequency is not influencing your performance) or negative correlation (the more you trade the less money you make), then you should make analysis - WHY are you trading more in some cases? Reasons can be either psychological (performance anxiety) or market-driven (you think that during some market condition you MUST trade more) or both. Your challenge here is to understand connection between your beliefs and your actions - in a nutshell, to understand WHAT drives you to trade more. Statistics will help you to understand whether it makes sence or not. We often think that we know our trading and our personal strentghs, but in reality we don't always know it - numbers don't lie - they show you real picture.

    3. Preferred trading instruments (biases) and destination:

    If you analyse your trading, you may discover that you tend to make more trades on specific currency pairs. For example, you have 5-6 major trading instruments, but make 80% of your trades on 1-2 instruments - say, EURUSD or GBPUSD. This approach can be effective in case you are trend-following position traders and capture large swings. But in short-term trading if you are trading more on some instruments and undertrading on other, in may create an effect of "episodic trades". Every trading approach is robust only during a series of trades, single attempts to "trade-off a setup" may cause a random distrubution of results. In short-term trading, there is much randomness and uncertainty, and one single trade doesn't make sence on most cases. According to my personal experience, stability in trading occurs only if you are ready to be make required series of trades, instability occurs when you are trading "occasionally".

    Good luck!

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    Keeping journal with all the details of each and every trade along with its consequences should be a must who wants to be a successful trader in Forex trading. As a new trader I use my own journal from which I get the overview of my trades. I can calculate the profit and loss of my recent trades and the position of my overall trades. It helps me to determine my next steps in trading.

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    Thank you for presenting such types of important informative post.I have read your whole post and i have learn many thing form your post..Trading journal is big community for all forex trader.Every trader come this place and learn forex trading very perfectly.Your tips is very important for me because i want to open a trading journal.and i will follow your all tips ..

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    keeping the record of our all the activities in the forex trading business will be very much helping for all of traders in order to learn new things and especially learning from the mistakes. it can be the turning point for a trader to get success in the forex financial market.

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    Quote Originally Posted by waqar1 View Post
    keeping the record of our all the activities in the forex trading business will be very much helping for all of traders in order to learn new things and especially learning from the mistakes. it can be the turning point for a trader to get success in the forex financial market.
    In forex trading,we should prepare the journal,to see how the mistake of trading is made by the traders,from the impatience to trade or to take decision in wrong pattern,money management problem to other problems which are unlimited for the traders when they trade in this market.

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    The frequency of the trades and the aggressiveness in the trading are interrelated things as the frequency will increase in the aggressive trading.While you need to have the bias of the trend trading and the take profit so does your profit making depends on it.

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    Quote Originally Posted by vipuldevkar View Post
    The frequency of the trades and the aggressiveness in the trading are interrelated things as the frequency will increase in the aggressive trading.While you need to have the bias of the trend trading and the take profit so does your profit making depends on it.
    If you know to limit yourself and to trade well with good strategy,decrease your aggressiveness in trading so you can really be a successful trader,we should know that being successful here means to have much money and change the way we live in our society.

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    Many thanks for introducing such sorts of important educational post. I have read your entire post and I 've discover several factor kind your post..Trading log is enormous neighborhood for a great many foreign exchange dealer. This position is come by every dealer and learn FX trading really absolutely. Your hints is very important for me because I'd like to open a trading journal.and I am going to follow your all hints.

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    Thank you for presenting such types of important informative post. I've read your entire post and I have learn many thing form your post..Trading journal is big community for all forex dealer. Every dealer learn forex trading quite perfectly and come this position. Your hints is very important for me because I'd like to open a trading journal.and I will follow your all tips ..

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    Thank a person for presenting such people involving keys to press informative post.I have read your entire post AS WELL AS i have realize many thing application your post..Trading journal will be big community regarding just about all forex trader.Every trader come the area ALONG WITH realize forex trading very perfectly.Your tips will be very important with regard to me because we want for you to open a good trading journal.and when i will certainly follow the most tips ..

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