How to Analyse Your Trading Journal in The Most Productive Way

It's very useful to know how to fill your trading journal efficiently with all the needed metrics.

However, we have to remind that we are doing it with a reason: analyse it at a later time. It's this analysis that contributes to the trader's progress.

Many traders actively journal but they kinda dismiss the analysis part. They think they already did the whole work but in fact, they have just started the number one step of the process.

The whole purpose of your trading journal comes to this section: the analysis of results. When I say results, I'm not only talking about the results of your trades, but every information you wrote down in the journal. The analysis of every parameter is necessary to take useful conclusions and put you in the right direction.

Once you have your trading journal in front of you, ready to be analysed you ask yourself:

Where do I start?

The first thing you should do, and this, I do it myself, is to split your wins and losses in two different groups and analyse them separately.

Open tabs with the screenshots of all your wins; analyse them and then, move onto your losses. First all the wins, then, all the losses. After this, move to the psychology section and this, you want to analyse independently.

This is done for a brain organization purpose. If you analyse your trades in the order you took them, your brain will have a hard time to take constructive conclusions about them. It will be all mixed up, wins and losses, and this way, is difficult to learn something.

In starting to analyse, is very important that the screenshots of your charts have the essential information that we talked about in the previous article "8 Rules: How To Create Your Trading Journal". Your charts should be well identified with your trades, with the maximum information possible so the process goes easy and smoothly.

Objectives of your journal's analysis:

• Find ways to win more when you win;

• Find ways to lose less when you lose;

How to analyse your wins?

The wins analysis is focused on 2 points:

- Understand what you did well so you can repeat more of it;

- Understand what you can do to improve your winners.

Below, are some of the questions you should be able to answer:

• Is the strategy you are using behind the gains, or have market conditions just turned out favorable?

• Are there some patterns or price behavior that repeats in the majority of your wins?

• How can you adjust your set up to get you in trades earlier? Is there a way?

• Are you closing winning trades too early? Is it that you need to adjust your profit targets or are you afraid of losing your unrealized gains?

• Is there some way you could've used to take bigger profits of those trades?

• Is there any correlation between your emotional state and your wins? Do you note some tendency?

• Are there trades you won by not following your strategy?

• Did you made mistakes on these trades?

• How many trades you won with the right psychological approach? And the wrong?

• Are your scaling in strategy working out?

Use your journal to determine the specific factors that are making you succeed so that you can apply them in a wider variety of market conditions.

Now that you analysed your wins, you will open tabs with all the prints of your losses.

How to analyse your losses?

By looking at your losses, you can notice certain price patterns that are common to all of them. Maybe you can come up with a way to anticipate a loss before it turns into a bigger loss.

This is the part where you can start to establish your trading invalidation rules. Those rules that make you get out of the trade before it hits your stop loss.

For example, did you notice that, in a loser, price takes longer to react to your entry?

Is this a present thing in your wins? Or in your wins, price reacts immediately to your entry, most of the times?

This is just an example. It's all up to your results and your own journal to establish this kind of rules. The only thing you're doing here is putting the probabilities in your favor.

Don't ever try to adopt other trader's invalidation rules or overall strategy rules. These are 100% dictated by your experience and trading journal, which is, obviously, not the same as no one.

Your experience is unique and the best teacher.

Below, are some questions you want to answer when you study your losers:

• Do you hold onto losing trades longer than you should? How can you improve your stop-loss processes?

• Did you notice that there's a way you can avoid losses if you wait for a second behavior of price action to take place?

• What could you have done differently to make prevent/reduce this loss?

• Are you losing more on trades you used higher risk?

• Are you losing more on trades your psychology was messed up?

• Are you making mistakes on your losing trades?

Then, there are other questions you can make yourself to understand in what conditions you're performing the best:

• What kind of market environments have you been doing well in? Trending or ranging?

• Were most of your wins or losses biased towards certain currency pairs?

• Did news events have brought on the kind of volatility you were looking to trade or avoid?

• Which trading sessions have been the most favorable to your trading style?

• Are you losing trades concentrated on certain days of the week, such as Mondays and Fridays?

This answers will make you establish your overall trading rules.

For example, if the majority of your losses are allocated on Mondays, you can establish the rule of simply not trading on Mondays.

If you lose more often when the market is ranging, stop trading on consolidations.

If you win more often in the London session, set the rule of only taking trades on that session (which by the way is very useful to free up your day a little bit more instead of being constantly looking for set ups).

Analysing your trades will make you feel way more prepared and confident. You not only develop your pattern recognition skills but you start to understand what a loss looks like before it turns into a loss and the same with your wins - anticipatory skills.

These are skills you want to develop! Believe me.

With time and the more you make adjustments to your strategy, it will start to become more and more detailed and you'll slowly put the probabilities working for you at a higher scale.

But always remember:

Perfection is to be found in the execution, not in the strategy.

The way you ride your trades, your performance, has more significance than the entries that your strategy signals you.

Analysing the Psychology section

Last but not least (at all!), you need to be analysing the psychology section of your journal and contrast it with the goals you set in the beginning of the week/month (depending on how you like to set your goals).

• Did you broke a bad habit you wanted to?

• Did you successfully implemented a good habit you had in mind?

• How did you deal with your emotions in your wins and losses?

• Can you tell you made progress by looking to your psychology before, during and after your trades?

• Can you tell in which areas you made improvements?

• What are you not proud of in your trading behavior?

The objective here is to analyse your psychology without looking to the results of your trades (win or loss). You want to analyse your performance, and the results, as we know, are NOT a reflection of the quality of your trading.

Never forget that a win is not necessarily good if you didn't use the right approach, which is, following your strategy and trade emotion-free.

A loss is not always bad if you respected your strategy and were able to cut it small.

The goal is not only to make money, but to make money trading emotion-free.

Let's not forget the missed trades

Remember? From the last post. You need to be writing down the trades you missed. The ones you should've taken with your strategy, but for some reason, you didn't.

Here, you want to understand why you missed those trades and what can you change to not happen again.

• Were you out of the charts or were you looking at price action but something made you reluctant about the set up?

• Was it a legitimate signal or setup according to your method or system?

• What made you doubt? Was some price pattern or your emotions?

• Is that pattern or emotion happening in your winning trades?

• If you had took the missed trade, would it had end up in a win or loss?

Conclusion

It sounds complicated to answer to all these questions when you want to analyse your journal, but in reality, you don't have to follow this like a bullet list guide. Has soon as you start the analysis process you'll know exactly what you should answer to.

In the end, you want to take solid conclusions of what can you improve in your set ups, strategy and psychology and how you can put the odds in your favor.

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Below, is my personal trading journal I use to prepare myself for the trading weeks. The purpose of it is to set your mental state for the week ahead as your trading ideas, goals and many other things.

There's a final part where you analyse in detail your whole performance on the markets at each trading week.

If you want to see improvements in your performance but you don't know how to journal, here is the best option for you to start making some progress (with the right dedication and commitment of course).

And that's it guys, this is the most efficient way to analyse your trading journal and make progress based on that analysis.

It's all about preparing you the best way to perform at your best! Then, results will eventually start to show up.

Your trading journal is your guide in the process.

Talk to you soon,

Have a great trading week!

The Perceptive Trader