10 Reasons to Keep a Trading Journal

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Work is draining, and I have not been able to post as many articles, focus on SEO or even logging my trades in a trading journal. This has made me soft. I need to make sure I keep my bare bones basic systems in place to continue to grow in my trading and learn. If I’m too busy to invest the 30 seconds it takes to log trade, then the trade isn’t worth it. I need to have a basic level of discipline so I can learn and ask questions in the future that I can’t even dream of right now. 

Why Bother Keeping a Trading Journal?

What a pain in the butt it is to log every trade, especially during the day when things are quite intense in the market! I decided to give up on it and decided that I could just wing it and export a CSV file once in a while to see how I’m doing.  My trading platforms all show me me year to date P&L and I can also see what’s taxed at short term and long term capital gains and losses. So why would I need to also log my trades in a trading journal?

Here are 10 Reasons I Decided to Go Back to Keeping a Trading Journal:

  1. Are those subs worth it? Are you following someone who is recommending trades that aren’t profitable for you? If you are and it’s not working out — then cancel.  You will only know if you have the trade log to prove it. If you look at your account in 6 months you won’t remember if a recommendation came from an IBD “trade of the day” or your uncle’s brother’s roommate’s sister’s aunt, or just a bad one you decided to enter. 
  2. How profitable are your trades?
  3. Do you always like to trade SPY a certain way? Is that way profitable? If not, what can you learn? Take a strategy like Iron Condors — are they actually profitable for you? How much return are you making on your covered calls? Is it worth it?
  4. Are all of your trades the same risk / reward?
  5. Are all your trades risk the same amount of capital, or could one of them blow up your account? a Trading Journal could help see the big picture.
  6. Are you mainly defined risk, or undefined risk?
  7. Are all of your trades bearish, bullish, or somewhat neutral? I like to use a Beta Weighted Delta to SPY for this, but a trade journal can also help you work this out. (video below and in the link)
  8. What is your win rate? Do you win more than 50% of your trades? Does that matter to you? Surprisingly you can still be a profitable trader and have less than 50% win rate if you manage your wins and losses carefully. Are you? Perhaps you only win 25% of the time but your wins are tremendous and huge and your losses are tiny so that is ok. Just having awareness is key here. 
  9. What is your average daily, weekly, or monthly P&L? What’s your YTD income? How much capital are you using?  Is your return trending better, worse, or staying the same? Are you OK with where it is, or do you want it to get better? 
  10. What accounts are you trading in – taxable ones, or non-taxable? Taking a loss before the end of the year might be a good strategy in a taxable account, but taking one in a Roth IRA may not give you the same benefit. Good to know.
  11. Are Calendars or Iron Condors giving you higher return? What stocks in those strategies are working?
  12. What was the IVR when you entered the trades? Where was the stock trading when you entered the trade? How much buying power did that trade remove from your account?

There is no right answer to these questions but if you want to continue to grow as a trader and avoid making the same mistakes, these are all good pieces of information to help you improve in a trading journal. They are not that hard to track in a trading journal. If you are willing to put in a little bit of up front investment in your time this sort of personal trade analytics may help you be more successful in the long run. 

Along the way, I thought there might be a cheap or free service out there that could do this for me, but I have not found it yet. If you have recommendations I’d love to hear them!

So far, I’ve looked at https://www.tradesviz.com but I cannot try the options strategy reporting without a premium subscription. So I need to do a trial because the free plan doesn’t seem to show me all it can do.

My System for Logging Trades in my Trading Journal

What is my “system” you ask? Very simple, and can be done with a google spreadsheet by logging : 

  • Date of Entry
  • Date of Close
  • Strategy used
  • Profit or Loss
  • Stock/ETF
  • IVR on entry & close
  • Stock price on entry and close
  • Comments or notes about the trade
  • Link or Image of the P&L graph from my trading software, or a tool such as optionsprofitcalculator.com 
  • Where I got the idea to do it. A newsletter? A comment? A tastytrader I like to follow? An article? A friend? Why did I take the trade? 
  • the date entry
  • And follow-up adjustments between open and close, and why they were made. 
  • link to Discord when this trade was first brought up. 
A P&L Graph of One of My Sample Trades

The fidelity isn’t super detailed, but it’s enough for me.  

Once I have this data, I focus on doing more of what is working well from a win rate and income generation perspective. For example, my best strategy has been covered calls, by far, but they are also the least capital efficient types of trades in terms of buying power. 

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