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29
Aug

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A Trading Diary Or A Trading Journal? What Is The Difference And What Is Better For You?

When it comes to journaling and recording trading performance, there are two types of formats a trader can choose from. Both have their pros and cons and in this article, we want to help you understand the differences so that you can find what is best for you.

 

#1 A written journal – a.k.a. The Diary

Most traders don’t keep a real journal, but what they have is a diary. Traders with a trading diary mostly use Word, Evernote or just a physical notepad to write down thoughts, feelings or ideas about their trades.

In its essence, the idea of a diary journal is good but the execution is usually less than optimal and there are no benefits from keeping a written journal if the notes just disappear in your drawer and you never look at the again.

In an article, published on Forbes.com, Dr. Brett Steenbarger wrote the following about trading journals:

“Medical patients report a decrease in their symptoms when they write about their stresses–and especially when their writing enables them to take a fresh perspective on those challenges. […]

Alternatively, when I have directed managers to keep solution-focused journals, describing what they did well, how they did things well, and how they could learn from their successes, the managers were: a) more likely to sustain journaling and b) more likely to find writing to be empowering and helpful.”

These findings imply that a written trading diary can help you deal with stressemotional pain and other psychological problems more effectively.

If you want to make the diary journal work, then we recommend that you keep the notes about your trades short and precise – avoid lengthy texts because the likelihood that you’ll ever read them again is close to zero. Instead, write down bullet points with the most important lessons and things you want to remember. This makes for an easy and effective review process. Keep the list next to you when you’re trading where it can act as a daily reminder.

 

#2 The trading journal

This type of trading journal is an analytical journal which analyzes the real trading data and the trading performance – such as entries, exits, drawdowns, strategies, setups, quality of trades, trade management, discipline, risk, and all other aspects of a trader’s performance. It then provides practical tips on how to improve trading performance or find performance leaks.

Traders often (mis)believe that an Excel spreadsheet is a good platform for such an analytical trading journal. But unless you are well educated in performance analysis and statistics, self-made journals are nothing but data graveyards and traders quickly abandon their journaling practice because it’s boring and they don’t get any value out of it; almost every trader has started some kind of journaling routine before but quickly gave up after a few weeks.

A real analytical trading journal, such as Edgewonk, analyzes relationships between all performance metrics, it puts the data into meaningful context and then puts out practical tips. Edgewonk even goes one step further and with the customization opportunities and the ability to track emotional and process-oriented data points, the trader receives insights into his trading and practical tips that he can start using right away in his trading.

Here are the most important points that a real trading journal should fulfill:

 

  • Customization and personalization

A trading journal must grow with a trader and a trading journal is something personal. Edgewonk offers countless personalization features so that you can create a completely individual journal, based on your needs. Whether you are a new trader who is just starting out, or you have been trading for decades, Edgewonk has countless features built-in that will help you in your current state.

 

  • Practical tips

After you have entered your trading data, the journal must show you what is going well, where you have problems and how to correct those. In Edgewonk, you get tips around trade management, you can evaluate your level of discipline and it provides you with insights into every part of your trading (order placement, risk management, position sizing, alternative trading approaches and future performance, just to name a few).

 

  • Effective review

The problem of diary journals or self-made spreadsheets is that they are input-focused and do not provide actionable tips. Edgewonk is like a real personal mentor and you can use the journal during your preparation, your post-trading analysis or for weekly/monthly review. All data points are meaningful and you receive practical tips about your trading that you can implement right away.  

 

How to keep a journal the right way

We might be a bit biased here, but we built Edgewonk for a reason and thousands of traders chose Edgewonk as their go-to journal because it’s the one stop shop for everything journal related.

The best thing about Edgewonk is that you can make it as simple or as complex as you want. If you’re starting out, focus on just the basics and let Edgewonk help you develop discipline. Once you progress and mature as a trader, you can use the other features to work on other aspects of your trading.

If you want to establish a journal routine but don’t know where to start, check out our trader development course where you get the Edgewonk journal and a step by step video guide on how to improve your trading, your routine and performance step by step.

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