To get the full benefit of your stock trading journal, you need to put as much relevant information as you can. The rule at the start should be: More is better than less; as you develop your journaling, you will be able to hone in on what the most useful information is for your analysis, but at the start, include anything that you think might make a difference.
Of course, you aren’t prepared to write volumes, so we can drill down a bit on what data might work best for you.
Start with the basic what, when, where and how much, and make sure you are as accurate as possible. Indicate the size of the trade in money terms, but also in terms of amount of stock purchased at a given price, and indicate what percentage of outstanding stock it accounts for.
Now ask yourself why? What were all the reasons that induced you to buy or sell? You undoubtedly considered market conditions first, whether the overall trend is higher or lower or stable. You should nuance this with as much detail on market direction as possible.
Then there was a specific reason to act when you did. Perhaps a company announced that it has an important new product or service selling rapidly. Or an impressive earnings announcement that pushed the price higher. Or a major management change. Or simply a technical setup that shows the stock hitting the support floor, giving reason to expect a bounce higher.
This kind of information might include the evolution of the sector or industry. Is there new demand for the product or service? Or do you want to short the stock because of industrywide shortages, or because new technology is making life tough for the company?
Don’t neglect to write about your own logic when you make the trade. Did you notice something that you think others didn’t? Was this a straight-forward momentum trade, or did you link up a number of technical trends? Do you think investors are piling into the stock, or did the stock itself move in a way that makes you believe it’s headed higher or lower?
As you expand your journal, you will use these detailed entries to analyze the weak points in your strategy. You’ll first begin to perceive patterns in your trading, and then how certain combinations of circumstances show up again and again in losing trades. You may find that your strategy has some flaws in it, making you invest when conditions aren’t right?
Or perhaps you are letting your emotions get the better of you, allowing anger push you to make revenge trades for losses, or permitting greed to motivate you to close trades too late?
With high-quality journaling software, entering any data you think might be useful is easy. High-quality journaling software will generate customizable reports to provide you with clear comparative information, and its automatic tracking of your emotions while trading.