Trading Journal or Trading Spreadsheet - Waste of Time?

As a full-time day trader now for nearly six years, I know what a roller-coaster life can be when first entering the market arena. I also know how much easier your trading life can be with the proper tools, tactics and mindset.

While all three are extremely important to your overall success as a trader, this article delves into the often neglected record-keeping aspect of your trading business. Why? Again, because it is very often neglected, especially by newer traders who are unaware of the challenges that they're up against in this business endeavor known as trading - an endeavor that is well known to have a 90% failure rate amongst retail traders.

Personally, my early days were akin to navigating a jungle full of killer predators, without a local guide to keep me from harm's way. An old trading partner of mine summed it up best when he said, "The Market will eat you up and spit you out and cuddle you back into her arms every day. And when you get fed up she will outsmart you, entice you and bring you back all over again." As a novice trader trying to take his pittance from the Wall Street jungle, I found that to be the truth!

After being rejected and coddled by the market one too many times, I came to the realization that I was literally spinning my wheels with no chance to succeed unless I could figure out exactly what was adding to my bottom line and conversely, what was keeping me from being just another "break-even" trader. I had already created a simple trading spreadsheet that told me the basics, but I had no way of tracking the overall performance of my trading activities.

I finally resolved never to take another trade unless the primary reasons for taking it could be analyzed over a sample number of trades. The result? I created a multiple categorical performance tracking sheet that would soon have me climbing the ladder of success. Lots of work and planning went into this project, but afterward I had concrete evidence that told me when I should step on the gas, or when to put on the brakes. What I created told me key statistics in six different categories, which led to a confidence boost that cannot be described.

There are six steps to my design:

1. Plan it
2. Trade it
3. Track it
4. Analyze results
5. Identify strengths and weaknesses
6. Improve

There are also five different categories that each of my trades fall into:

1. Long or short
2. Time of day
3. Strategy / Entry
4. Trading timeframe
5. Management / Exit

Thousands of trades have now been logged and I can tell you what my Winning % and Profit Factor is for each of the five different categories. With this information, you can easily calculate your Expectancy for each category into which your trade falls. You can also determine what type of Drawdown any one category is likely to give you. Wouldn't you like to know this information? Actually, my spreadsheet tells you this as well!

Monitoring your performance in specific key areas will help you determine where to focus your efforts. When involved in such a high-stakes occupation, when going up against the best-of-the-best, when trying to survive "another" day while not becoming part of the 90% club, don't you think you should establish a way of tracking your trading progress?

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