TRADING DIARY—YOUR KEY TO LASTING SUCCESS
Make mistakes—but do not repeat them! People who like to explore and learn always make mistakes. Whenever I hire people, I tell them that I expect them to make mistakes—it is a part of their job description! Making mistakes is a sign of learning and exploring. Repeating mistakes, on the other hand, is a sign of carelessness, or some psychological problem.
The best way to learn from your mistakes is by keeping a trading diary. It allows you to convert the joy of successes and the pain of losses into the bankable gold of experience.
A trading diary is a pictorial record of your trades. It documents your entries and exits by using charts with arrows, lines, and comments. I create a diary entry for every purchase or sale. To make sure my diary is always current and up to date I have a rule—no breakfast until my diary for the previous day is completed. This encourages me to update the diary before the market opens and a new trading day begins.
It is important to document every trade. The only exception to this rule is very active day-trading. If you make a dozen trades each day, you may allow yourself to create a diary entry for just every third or fourth trade.
Why a pictorial diary in addition to the spreadsheet?
You probably carry with you photos of people and things you care about. In your wallet, purse, or on your desktop, you have photos of your wife, girlfriend, husband, children, dog, house, or car. Now I also want you to carry ...