| Trading Plan & Trading Journal, Two Tools to Help | | | | seem like busy work, but can actually remove some |
| You Grow as a Better Trader | | | | of the fear of the market and give a newcomer hope, |
| One of the established ways to determine whether | | | | if they see how their hard work and practice is making |
| you have developed a winning trading plan comes by | | | | them more proficient in the market. |
| reviewing your trading journal. Smart traders of the | | | | What should a trading journal include? Most veteran |
| stock and options market realize they must track their | | | | traders recommend that as much information as |
| trader performance by seeing what has worked and | | | | possible be included, since that makes it easier to |
| what has failed to work in their investing. The best | | | | identify why certain decisions were made or why |
| way is by logging your trades into a journal. | | | | mistakes occurred. Among the essentials to be |
| Some people prefer to write their trading plan into a | | | | included in a trading journal are these: |
| spiral bound notebook, while others create a trading | | | | . The stock or option purchased, as well as how many |
| journal spreadsheet. The form that the trading journal | | | | shares of stock or options contracts were purchased. |
| takes is not relevant. The main thing is to use the | | | | . The amount of money invested in the trade, denoting |
| material to determine whether you've made better | | | | whether it was risk capital or investment capital. |
| trades. | | | | . The reason or signal that caused you to enter or exit |
| A trading plan can help any individual set their goals, | | | | the trade. |
| establish a time frame, and begin the process of | | | | . Your entry strategy and exit strategy when starting |
| trading without emotions. By putting goals in writing, a | | | | the transaction. |
| trader can set up guidelines to follow and institute | | | | . Your stop loss levels, whether a percentage of the |
| benchmarks that help an individual see how they are | | | | trade or a dollar amount. |
| learning and growing in their stock market knowledge | | | | . Your technical analysis of the trade: what the |
| and ability. | | | | indicators said, where the stock was in terms of |
| A good trading plan begins with education; you can't | | | | support and resistance. |
| trade the stock market unless you know what you're | | | | . A complete record of the trade, breaking down each |
| doing, otherwise you could face fast financial setbacks. | | | | day of the transaction. |
| You need to establish a strategy to use and become | | | | A complete trading record over time stops you from |
| proficient at it; don't try to use a dozen strategies, but | | | | repeating the same mistakes. An occasional review of |
| rather become accomplished at one and continue to | | | | your trading journal will serve as a reminder of what |
| hone your ability. Learn how to read a stock chart and | | | | went wrong - and what went right. If you see a |
| conduct technical analysis, which gives an individual the | | | | pattern of failure, you might discover that you've been |
| ability to spot market trends and potential movement. | | | | duplicating the same error. |
| Find a mentor or a coach, someone who has | | | | Be sure to keep a complete record when you add |
| experienced the market, and enlist their help. Then it's a | | | | strategies to your trading plan. It's better to do this with |
| matter or practice, practice, practice, until reaching a | | | | non-funded trades, since the journal will point out the |
| level of success that makes it imperative to begin | | | | flaws in the process. If you are able to trade |
| funded trades. | | | | successfully in non-funded trades, you should be able |
| Newcomers might not appreciate the value that | | | | to do the same thing when you switch to funded |
| comes with completing a daily trading journal. It may | | | | trades. |