why you need a trading journal

Think of it this way: a trading journal is like the monitor in a race car that tracks performance metrics. Without it, you’re racing blind. Sure, tracking profit and loss (PnL) matters, but understanding why your PnL looks the way it does is what takes your trading to the next level. Here’s a quick breakdown of why traders rely on journals:

1. Find Your Best Trades: Know which securities actually make you money. Without tracking this, you might be trading stuff that drags your PnL down.
2. Identify Winning Strategies: Are you making the most out of breakout trades, scalping, or technical analysis? Markets change, so tracking strategy performance helps you stay effective.
3. Spot Your Prime Time: Some traders crush it in the morning but lose gains in the afternoon. A journal lets you see when you’re most profitable.
4. Understand Win Rates & Risk/Reward: A 20% win rate can still be profitable if your risk/reward ratio is solid. Your journal will reveal patterns and help adjust your strategy.
5. Keep Tabs on Fees: For scalpers, commissions can eat into profits fast. Track costs just like any other business expense.
6. Record Daily Thoughts: Keeping notes on your trades, ideas, and emotions helps you stay focused and grow.
7. Track Trading History: Look back on your history to set performance benchmarks and goals. A journal gives you that big-picture view over days, months, or years.
8. Manage Risk & Reward Ratios: Knowing your entry/exit points and how much you’re willing to risk is crucial. Journals help make these decisions easier.