Trading Journal Checklist

Almost every trader I know who has been doing this for awhile has learned the importance of keeping a trading journal. While all traders approach it differently, the key is to have some way to measure, track, and stay focused on improving your performance.

In his column "The Write Stuff" at Trader Monthly, Doug Hirschhorn recommends that trader adopt a 15-point template to making the most of our trading journal and I think you'll find these points helpful as a starting point:

1. Establish your trading rules for the day. For example, if you've been struggling lately, you might establish a rule that you'll take 50% off your winners on the first hint of a pullback.

2. Identify the major world events that are currently in play.

3. Figure out which economic numbers are in play today.

4. Create a motto for the day. Keep it brief and positive.

5. Develop your morning game plan (be sure to do so before the open).

6. Evaluate your morning game plan (how did things really play out? How did you react? Did you stick to or stray from your game plan, and why?)

7. Prepare an afternoon game plan (create it over lunch, say, before the afternoon session begins).

8. Evaluate your afternoon game plan. A quick retooling of strategy could pay off in the second half.

9. Ask yourself: What did I do well today? What could I have done better? Use this step to dig deep and engage in some genuinely tough self-analysis.

10. List all your trades that appear to be working and all those that aren't.

11. Call the market -- is it range-bound? Trending? Which sectors are in play?

12. Determine for yourself: On a scale of 1 (low) to 10 (high), your level of focus and concentration for the day.

13. Your daily question: Am I a better trader today than I was yesterday? If so, why? In other words, what exactly have I learned? A day without learning is a wasted day in a trader's career.

14. Which trades should I pay attention to tomorrow?

15. My goal for tomorrow is?

Without any doubt, the kind of checklist Doug has developed is focused on the short-term trader and I think these are good starting points. I also think that having a journal is appropriate and useful even for those of you with much longer time-frames. For example, if you're more an intermediate to long-term investor, you'll need to extend the time frames on just about every one of these checklist items. For example, instead of developing a daily game plan, you'll want to create a monthly or quarterly plan instead and so on.

The point is that if you integrate and customize some of these checklist items into your daily routine I think that you'll certainly have a much better understanding of how you're really performing and be in the position to improve that performance. It takes time and effort at the beginning to get a trading journal, but you'll find after awhile that it will become habit and you'll actually enjoy the work you put into it.