Record keeping looks simple. But it is not in the actual case. We need to have discipline and dedication before we can do trade the proper way.
There is no doubt that record keeping is very important in Forex trading. However majority of trading fail to do so, and some don’t even keep any trading record.
Let see why we need to keep record.
Forex trading is a business. As a business owner we need to make sure we make profit, full stop. That is the ultimate objective. So how do we know we are making money if we don’t keep any trading record? We can analyse our trading performance base on the records.
The most important reason, we don’t want to repeat the same mistake again and again. Only with proper record we know what we are doing. We can avoid repeating the same mistake. We should learn from experience.
In general we need to have at least three types of records:-
Trading Spreadsheet
Trading spreadsheet is a place where we record all our trading data in details. This is where we record the entry signal, exit strategy, time, buying price, selling price, lots/units and all other important data.
Equity spreadsheet
The sole purpose of equity spreadsheet is to measure out performance. In this spreadsheet we need to record our equities at a certain period of time. We can do this on monthly basis. Every starting/ending of the month we need to calculate and record the total equity that we have. This is more like a review session. If the equity drops significantly, then we need to find out why it happens. The record shows us our business direction.
Trading diary
In addition of the above record, we also need to have a trading diary. We should record all our observation in the trading diary. The diary will teach us what we have done wrong. This is where we learn from our mistake. We also can learn new technique based on observation from the diary.
We need to record all our trading activities in a proper manner. This helps us monitor our performance and learn from our past mistake.
