timothy sykes logo

Penny Stocks News

How To Use A Trading Journal

Timothy SykesAvatar
Written by Timothy Sykes
Updated 1/11/2023 7 min read

How to Use a Trading Journal

If you’re a trader, you’re a student of the markets and you’ll need to know how to use a trading journal.

My best students and I take detailed notes, as you can see I do on every trade HERE, as we’re always adapting to the markets trying out various strategies and patterns and for traders, this process involves keeping a detailed trading journal. Never forget that successful traders track all of their moves and then optimize, optimize, optimize over time and while perfection is truly impossible, practice does make close to perfect in this industry and the one common element that all my top millionaire trading challenge students and I have in common is that we are meticulous in testing and refining our strategies to better adapt various market environments and our own strengths and weaknesses too.

This educational process is critical to your success and this is why we created Profitly and now have a section where you can even make your own blog posts and/or video lessons and watchlists too at https://profit.ly/contribute

If you think it sounds boring and cumbersome, maybe it is, but it’s your best shot at becoming successful so you’ll thank me later. There’s a psychology to every move you make, and there’s a pattern to every trade you enter and exit so as part of your education you must being to understand your own best and worst patterns, how they change, when they are successful and when they aren’t. And the only way to do this is to keep a detailed record of every move you make and then review your journal often.

This has been a CRUCIAL PART OF MY EDUCATION — not just as a trader, but as a teacher, too.

Need more proof about how important it is to document and learn from ALL of your trades? Watch this video with my top Trading Challenge student who just surpassed me in total trading profits:**

He’s a BIG believer in keeping track of various strategies and patterns and documenting everything, just like this great trader and this one too…it’s a trend!

What Should I Put In My Journal?

So, what are the key elements of a trading journal? Action and emotion. It should note when you entered a trade, and when you exited; your short or long position; what the stock did during that time; what technical indicators or catalysts made you enter this trade; and—importantly—what you were thinking when you entered it. Your emotional state on that day can give you insight into success or failure—so keep track. You’ve got moods, and a journal helps to establish patterns so you can better assess which days are good days to trade, and when it might be better to take a break.

Here’s a hypothetical example for someone who is a total newbie:

So, basically, if you keep a journal like this, you won’t have to ask yourself how you lost money on a trade and how you might have repeated that mistake a week later, or a month later.

Trading is a skill you learn—and keep learning—every day, even if you’ve been at it for years. There’s always something new to learn about patterns, about stocks, about the market—and about yourself.

The best way to see yourself growing as a trader is to keep a journal of your progress. And the best way to actually progress is to build on each move, which means recording each move. Otherwise you really only have a general recollection of your trades. Filling in the journal for each trade also helps you to better understand yourself in the process. It makes you dig a bit deeper into your psyche to figure out what you were thinking and why you were thinking it. It makes you examine and analyze your thoughts, not just record them for future use. So it’s useful in the present and the future.

It’s a great way to learn from mistakes; and mistakes are necessary in order to learn.

It’s also important to start the journal immediately—from your first trade. It doesn’t matter if it’s old school, with pen and paper, or digital, but digital makes it easier for you to update your journal. For instance, you might watch a stock you sold for a while and see what it did and how much you could have won or lost. A digital journal gives you that flexibility, while also allowing you to easily search it for symbols or key words.

If you’re not sold yet on the journal idea, I’ll sum up 5 benefits to having one:

#1 Easy Trade Tracking

Sure, you can see your trading history and all your moves on your broker app or website, but this isn’t enough. Your journal should have every relevant detail of a trade, and something your broker history won’t give you: The reasons you entered in the first place, and what made you exit. This is where you record your thought process, and it’s vital to your trading future.

#2 Easy Method for Reviewing Trades

The main reason for having a trading journal is ease of reviewing a fuller trading history. You can compare all your entries and develop a new strategy. If you enter all the details in your trading journal, it will help you track your profit goals and evaluate long-term risks and earnings. Are you making progress toward the goals you had when you set out? Your journal tells all.

#3 Learning From Your Trades

Every time you review your trades, you will find out what you were doing wrong, and you will learn from your mistakes. And when you learn from your mistakes, you will know how to avoid repeating the same mistake at the next trade. Also, the journal record of a good trade will help you to focus on advancing your strategy and achieving your goals. Good or bad, there’s something to learn from every trade.

#4 See the Big Picture

Not only will your trading journal give you better insight into who you are and what you’re capable of, but it will also give you a bigger picture of the market and how it works. Writing and reviewing your journal will tell what kind of trader you are, and what kind of trader you should be. It tells you what kind of stocks work for you.

#5 Score a Mental Victory over Loss

Your trading journal will help you to recognize your losses and turn them into a mental victory. If you don’t write down your losses, you leave them unresolved. A journal gives your closure, and lets you sleep.

Keeping a trading journal with all these details might seem exhausting. I know, you’re thinking that everything you need to learn to be a successful trader already seems overwhelming. But a journal will actually make your overall workload lighter. Remember, we’re all students, and students without notes are lost—and lost money.

So, if you understand what I’m saying in this post, then please leave a comment and promise me that you’ll follow these instructions and start using Profitly to keep track of ALL your trades…trust me, it’ll help you SO much in the long run!

How much has this post helped you?

Leave a reply

Author card Timothy Sykes picture

Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”