What a profit-and-loss-only journal cannot show
Numbers alone make it hard to see why you lost, or whether you keep losing in the same way. For example, these two losses mean different things:
- A loss where you entered by your rules and exited at your planned stop
- A loss where you entered a setup you had not planned, right after another loss
The first is a normal loss that is part of your strategy. The second may come from your state at that moment, not from your strategy. To tell them apart, you need to write your feelings and your rules on the same line as the result.
One trade, one line
To make it easy to keep going, write each trade on one line. Columns like these are enough. “Planned setup?” means: did the trade match the conditions (your own rules) you set before entering?
Swipe the table sideways to see all columns →
| Date and time | Symbol, buy/sell | Planned setup? | Feeling before entry | Kept my rules? | Profit/loss | Note |
|---|---|---|---|---|---|---|
| Mon 21:10 | EUR/USD buy | Yes | Calm | Yes | −12 | Hit my stop loss as planned |
| Mon 21:25 | GBP/USD sell | No | Frustrated | No (moved my stop) | −30 | Wanted to win it back |
(The numbers only show the format. Write profit and loss in your account currency.)
Words for feelings
Rushed / frustrated / bored / anxious / hopeful / tired / calm / confident / not sure. If none fits, use your own words.
“Kept my rules?” is yes or no
If the answer is no, write which rule, in a few words (“moved my stop,” “went over my trade limit,” and so on). If you tend to move your stop, see Why you move your stop loss, and what to check first.
Write the profit or loss correctly
The safest way is to copy it from your broker’s trade history. If you work it out by hand, the profit and loss calculator gives it from your entry and exit prices. (It does not include spread, commission or swap, so it may differ slightly from your history.)
At the end of the day, count three things
- Trades today (compared with the limit you set)
- Trades where “Planned setup?” was no
- Trades where “Kept my rules?” was no
The daily trading tracker counts your trades and results with one tap after each trade (it does not keep your feelings or rules, so write those in your journal). If you worry about trading too often, see How to notice overtrading.
Review once a week
Writing is only half of it. Looking back is where patterns show up. Once a week, check three things:
- Add up profit and loss separately for trades where you kept your rules and trades where you did not
- Feelings before the trades where you broke a rule: does the same word come up often (“frustrated,” “bored”)?
- Times or days of the week when you broke rules more often
For example, if you see that you often break rules on trades after you felt frustrated, you could set your own rule, such as “no new trade for X minutes after a loss” (only an example, not a recommendation). With only a few trades, a pattern may be chance, so keep watching before you decide.
What research shows (briefly)
- A review of 138 experiments (about 20,000 people) found that people who were prompted to record and check their progress toward a goal were more likely to reach it. The effect was larger when progress was recorded or reported to others. The goals were in areas like health and exercise, not trading.[1]
- A study with 80 day traders, which tracked their emotions every day for five weeks, found that traders with stronger emotional reactions to gains and losses tended to have worse results. It does not show which one causes the other.[2]
- In a lab experiment (30 people), choosing a word for the emotion shown in photos of angry or fearful faces reduced the response in the amygdala and other emotion-related brain areas. It did not study people’s own feelings during trading.[3]
This does not mean a journal will improve your results. Still, research suggests that writing things down can help you notice your own patterns, and one lab experiment found that choosing a word for the emotion in photos of faces reduced emotion-related brain responses.
If losses are hard for you, or you find it hard to stop even when you want to, you do not have to deal with it alone. Many countries and regions have support services for money worries or compulsive behavior.
Sources
- Harkin, B., Webb, T. L., Chang, B. P. I., Prestwich, A., Conner, M., Kellar, I., Benn, Y., & Sheeran, P. (2016). Does monitoring goal progress promote goal attainment? A meta-analysis of the experimental evidence. Psychological Bulletin, 142(2), 198–229. https://doi.org/10.1037/bul0000025
- Lo, A. W., Repin, D. V., & Steenbarger, B. N. (2005). Fear and Greed in Financial Markets: A Clinical Study of Day-Traders. American Economic Review, 95(2), 352–359. https://doi.org/10.1257/000282805774670095
- Lieberman, M. D., Eisenberger, N. I., Crockett, M. J., Tom, S. M., Pfeifer, J. H., & Way, B. M. (2007). Putting feelings into words: Affect labeling disrupts amygdala activity in response to affective stimuli. Psychological Science, 18(5), 421–428. https://doi.org/10.1111/j.1467-9280.2007.01916.x