In this blog we are going to discuss using a trading log. This tool is important to all traders, especially new traders with smaller accounts. When used correctly it will help you with your money management and refine your trading. You can do a Google search to find several trade log packages to purchase or you can just use Excel to build your own trade log customized for you. Below is a sample of the Excel sheet that I use.
It is important to enter each trade as they trigger. By doing so, you can use this as a confirmation that the trade is correct and allows you to correct it right after entering the trade if it is not correct. Also, if you use more than one trading system you should have a separate log for each. So, if you day trade and also swing trade have a log for your day trading and a separate one for swing trading. If you use Excel, then just put them in separate tabs in the same Excel worksheet. This makes it very easy to compare.
One of the most important sections of a trade log is the trade notes/journal. Explain the reasons you took the trade. Example: it was a strong trend with all of the moving averages stacked, had a 2.5 RRR and no resistance between entry and target. You may also want to include how you felt that day.
After you have several trades you can start to compare and see which ones did better. Over time you will start to see a pattern. This will help you refine your trading and improve your trade selection.
Click on this link to download a free copy of the The Trading Log.
I hope this was helpful.
Want more tips for Trading A Small Account? Join Tucker Stipe for a live webcast on Trend Trading on Simpler Stocks.