Ross Maxwell - Trade Journals

Ross Maxwell · Consulting · Beginner

In the final video of the series delivered by Ross Maxwell, he looks at Trade Journals. Ross breaks down the importance of having a journal and what information to track. Ross later goes onto look at how to utilize this information to improve your trading, the importance of being honest in the journal, and where a lot of traders slip up in journaling. He finishes the video by breaking down a real example of a trade journal he uses and gives to his students. If you have liked Ross's teaching or trading in this series and want to learn more, access his mentorships at the following link - https://keyzonetraders.learnworlds.com/link/rEugyh

Transcript

Okay, so one of if not the most important document about your progression as a trader is your trade journal. Okay, and it is absolutely vital not to to to only do once you become successful. This is vital, even more vital when you very first start out because it is the biggest tool that you can use to improve yourself as a trader.

And I sit there and say when I'm coaching traders, when I'm mentoring traders, I sit there and the first thing I say to them is if you do not complete your trade journal and you do not complete it honestly, I cannot help you as a coach improve your trading because this gives you the data, the unemotional, the the full warts and all data to be able to improve yourself as a trader. Okay.

So it is absolutely vital that you make this part of your routine to fill out and complete your trade journal. Okay. Um, it should be done as soon as possible and it should be done uh as as uh it should be absolutely part of your routine.

If anyone says that they don't have time to complete their trade journal, then you don't have time to trade because this is just as important if not more important than the trading itself. So if you're if you set yourself aside 2 hours to trade, okay, you need to set yourself aside half an hour to to to complete your trade journal.

If you can't, then you need to reduce your trading time by half an hour to allow yourself the half an hour to complete your trade journal. It doesn't take a lot of time. Doesn't need to be over complicated, but it must be done because it is I can't stress enough how vital this at to all this is to improve yourself as a trader.

Okay, so you, as I say, it's a must-h have tool for all successful traders and you must make it part of your routine to complete and update your trade journal regularly.

Fill it out. It's really important you fill it out as soon as possible after a trade completes because the details of the trade are still fresh. Not just the details of the trade themselves, but the way that you felt during that trade, the the emotions that it brought through, any sort of thought processes that you went through whilst you was in the trade. Okay.

Keeping a detailed journal helps us review our trading processes, not just your profit and loss. Because reviewing your journal helps spot what's working and what isn't so we can fine-tune our strategy. And journals hold us accountable for mistakes and ensure we learn from them. It is absolutely vital that if you make a mistake, you journal it just as much as if you do everything right. Okay?

Don't just go, "Oh, I know I didn't do that right, so I won't journal that. I just won't do it again." And that is not what a journal a journal is there to to make to to write down absolutely everything that you do because yes, you might sit there and go, "Oh, I won't do that again." But then the next time you do it, you go, "Oh, no. I won't do that again." You don't journal it again.

This is a repeated pattern that you're not being able to identify from the data that you're putting into your journal because you're you're trying to hide from it. So, you must put every single piece of information, every single trade that you trade within your journal.

We're going to talk about the things that you need to and the um the data points that you need to um to keep. Um there may be some that you want to add yourself. I think it's important not to over complicate it. But I'm going to talk to you about some experiences that I've had with clients as well just to show how important they are.

And you, as I say, you want to set time aside in your rout in your routine to review your journal as well. Don't just fill it out and think that's the job done. You need to review and analyze your performance as well.

So do you want to journal any factors that are relevant to your trading? Um as these are the variables that helps improve. Now you might add a few to this as well but these are the ones that I think are absolutely vital for your uh like as a bare minimum for what you need to do.

You want to set you want to uh detail your day, date and time because it helps identify if your strategies work better at specific times or on specific days. Um instrument some markets suit certain strategies better.

Um so others may match your trader profile more naturally uh and you might be better at certain uh instruments than others. Uh the strategy because it will show you which setups suit your personality and which are losing effectiveness. Different strategies suit different trader profiles as well. So just because one strategy works for someone may not mean that it works for somebody else.

So again by keeping uh track of this you'll be able to work out which strategies are actually in your in your trade plan are actually working. You want to identify time frames because not all traders are suited to all time frames. So you want to find the ones where your decision making thrives and benefits your trading risk. Uh this is absolutely crucial.

It ensures that you're not overleveraging and it it helps to make sure that and track that we are maintaining consistency in our leveraging across every single trades across all of our trades. And we covered that again in the in a previous session.

You want to notice whether you want to track whether you're buying or selling because it helps check if we're trading with the overall market bias. Uh again, you know, I've actually I'll go into some details, but I I've actually been uh with traders who stick to a bias no matter what happens with the market. And we can see this from their journal. You want to uh put the trade details in.

So where you enter, stop and target because it it will allow us to see what our riskto-reward what like I assess our risk to reward and whether the entries were rust or whether they were planned and make sure that our risk to reward makes sense and creates the edge in the market. You want to you obviously want to track the result of your trade as well. Okay? So you want to track it how you manage.

So if you actively manage a trade, you want to have a section in your journal as to how it was, how you actually traded it in the market. But you also want to have uh a section uh where what would happen if you just entered the trade and walked away from the market. Okay? And didn't didn't interfere with it at all.

Because what this will do is it will allow us to see whether our trade management and whether our management of the trade is uh being is having a negative impact on our overall P&L. It will show whether we're micromanaging. It's whether it will show whether we're overmanaging whether we're emotionally managing trades. Um which is coming to the detriment of our P&L. Um you also want to just have a quick note.

Did you follow your trade plan? Just a simple yes no because we'll be able to see then that we're following the trade plan. you know, n it's okay. I say it's okay. You know, even now and then I have trades that I take or I do something that's not part of my trade plan, but you want to be making sure that you're following your trade plan like 95 98 99% of the time. Okay? And that will come over time.

That's something that but by putting whether you uh are following your trade plan or not, just a simple yes no, you'll be able to see how many times you're deviating from your trade plan. Then you want to keep some trade notes. You want to capture your thoughts, emotions, any sort of external factors that influenced your um influenced your trade.

Um anything that helps spot behavior patterns or insight into future improvements. For example, I remember once I you know I noticed that I was having to leave my desk too often towards the end of the day which was resulting in me not being able to manage trades. So therefore I reduced the time uh that I was allowed to enter trades.

Okay. So, just so that I can I could keep my um trading within the framework that fitted my lifestyle and everything that I wanted to do. Okay. Uh we're going to go through uh uh uh these bits in a moment as well. We're going to go through uh uh a template of a journal.

And again, I'll give this template to the guys so that you can hopefully have access to it. Uh and I'll show you some of the things and we'll talk through about why I think some of these things are so important as well. on the things the experiences that I've had with coaching clients and the patterns that I've been able to spot. Okay? So, you want to regularly review your trading.

You want to review it daily when you're completing your trade journal. So, at the end of each day, you want to be able to put in all the trades that you've completed that day and filling it out weekly to analyze your weekly performance and trading processes. Make sure that your processes aren't slipping. Wouldn't this isn't like a full deep deep detailed um journal dive.

It's just making sure that your processes were on point that week. If your processes weren't on, like if you if you start to deviate from your processes, you want to get yourself back on track for the following week. You don't want to wait weeks and weeks and weeks before you realize that your your process you let your processes slip.

Monthly, you want to review your trade results and your strategy performance. So again, maybe make this is a good time to review it alongside analyze your your personal your um your personal performance alongside your trade plan.

Make some tweaks to it and analyze your performance. And then you want to also assess it annually to assess the overall return to consistency over the years. The this will give you a a large enough data sample size to to to show you whether your strategy had an edge or not.

You want to add this review process into your trade plan and use calendar reminders to stay on track because reviewing your trade journal as well as your trade plan is a vital part as growing as a trader. Focus on reviewing the process, not just the P&L, okay?

because you can just because you have um a winning trade doesn't necessarily mean that you followed your trade plan. It's really important to be able to differentiate and be honest with yourself in your journal about whether you followed your trade plan or not.

Okay? And a winning trade isn't always executed well. Uh and a losing trade doesn't always mean you did something wrong. Okay? Our greatest lessons often come from our mistakes and they give us the insight we need to improve.

So this is why we must keep those mistakes in our journal as well because if we can see repetitive mistakes, we have something that we can work on to improve and fix to improve ourselves as a trader. Okay. So now let's have a look at a journal.

Okay, journal template. This is again like I say this is what I will give to the guys. You can you can have it and you can uh hopefully uh change it yourselves as well. This gives you an account balance. you know, it could be uh 10,000, could be 100,000, it could be 1,000, whatever it is, you put that uh your account balance in there. Okay.

Um day of the week, um what day you're going to trade on, you know, I would always recommend putting these filters as well, so you can play around with the filters to see what is working and what's not. You know, I've had it before where people um perform really well at the beginning of the week because uh you know, they're fresh.

Uh they're they're you know, their their cognitive resources are refreshed after the weekend and as the week draws on, they become fatigued, slower, they're working other jobs, they become tired, uh and then their performance slips towards the end of the week.

I've also had it where their performance at the beginning of the week is really poor because they reset themselves and they're almost too keen to try and force their new found trade plan into the week and they make the mistake because they're trying to force it. They make mistakes earlier on in the week. Okay? So, like I say, there's no fixed right or wrong with this.

Sometimes strategies just work better on different days as well. I've seen that across um in my time as a coach. day of the week can actually show when you're performing well, which days you perform well, which days you don't, and then you can work out why. Uh, and then you can either work on fixing the reason why you're not performing well on those days, or you can adjust your trading.

So, you focus on the days that you trade well on. Okay. Um, the time of uh so date again, date, sometimes, seasonality.

Again, I noticed very early on in my trading career that um my trading strategies and I've I've since come to realize uh through speaking to other professional traders that they find something different uh some something very similar should I say sorry summer months July August very tricky trading conditions performance drip uh slips returns slip um so what do I do now I become very I I become much more selective in

my trading uh towards towards the end of July and through August, I take much fewer trades. So, I'm much like I say, I'm I'm I'm really really focusing and honing in. And actually, uh the majority of time I take the most of August off now. Uh and I go on holiday.

Uh spend time with my family, just dip in and out of the charts just to make sure I'm only taking really high probability trades just to make sure that I'm focused and not doing myself any damage. So, again, firsthand experience of why that can be really important. Time of the day. Some c some strategies work best uh at market opens, market closes um when volatility is higher.

Some work better during the lunchtime sessions when volatility is dropped a little bit. Okay, so it's really important for that. Um I've also had it with clients before where we notice that they perform really well in the morning and then they dip in the afternoon. And this can be for a couple of reasons that I've come across.

Uh one was a guy in Australia worked out that he become really tired in the afternoon because he lived in a really hot part of Australia and just in the afternoons he become so tired and fatigued from the heat that his uh his cognitive resources slipped and therefore he was not performing very well. Uh another one he wasn't eating properly at lunch used to have heavy lunches.

So again that brain fog come in he didn't perform very well in the afternoon. So what do we do? You got two choices there. You can either limit your trading to the morning only or you can change your diet in the lunch and and eat something better to be able to progress uh to to to continue um trading in the afternoon. Okay? Again, no right wrong.

You just you once you can identify a problem, you have options to fix it and therefore improve your overall trading performance. Instrument, okay, again really important. Every single instrument, every single asset class has different characteristics. whilst um the fundamentals and the the the theory can remain the same, you know, some strategies work best on some instruments.

So, this allows you to work out which uh instruments work best with your strategy. So, you can focus on those. Uh and likewise, strategy, this keeping an eye on the strategy section will tell you whether your strategy is working or not. Uh and how you can uh which which one suits your trader profile more. Time frame.

Again, you know, some people uh work better on really slower time frames where they are in and out can think quickly and they don't have to have to to think about the trade over too too long or check the trade multiple times over over several period like over several days or several sessions.

Others pref uh prefer because you know if they if they have to look over several sessions they may end up um like meddling with the trade too often. Um whereas others like that sort of uh time to assess the market, think it through much slower pace, put the trade on, only check it once a day and that sort of suits them better.

So being able to track the time frame, you can see which time frames are working best for you and your trading. Um, risk, as I said, being able to make sure and monitor that we're keeping our risk uh the amount that we're putting at risk uh on each trade consistent is really, really important. No point putting in here risk 1% if you're going to lose one and a half% on the trade. Okay?

Just because you were supposed to put 1% on, that's not what you put in here. You put the overall risk you put on in the market once you entered the trade. Buy or sell. And again, this is a really interesting one. I worked with a guy once who had was so convinced that the stock market goes up, okay, that he could not sort the stock markets. He could not sort indices even when the markets were short-term bearish.

He was always looking to buy the market. It got him into a lot of trouble when the market would sell off. Even though the market, overall market was bullish, he would just constantly buy even when the market showed that he was in a correction. So again, this can show if you're uh married into a bias too much to the detriment of your trading.

And then your open stop and target to to show your risk-to-reward and uh uh potential as well. And then quite simply, you just put in here whether you win, lose, your profit and loss automatically calculates where your percentage uh returns all down here. And this is where so this is where you would put your traded result, how much you um how much you you made when you traded it.

And this is where you would put if you put your set and forget. So if you just place a trade uh and um walked away.

And what this will do is over a period of time it will tell you whether you are overmanaging your trade um or whether it's having a maybe it's having a beneficial impact on your overall bottom line and therefore you can see that your active management trade style is working or if you're overmanaging the trade and you can you need to sort of like loosen your uh your management a little bit.

And then here, you know, did I trade as per my trade plan? This wants to be the majority. Yes, everyone has a slip every now and then, but you really want to be trading as part as to your trade plan the majority of the time or should I say like literally like 99% of the time you need to be trading consistently to your trade plan.

And then trade notes and emotional notes because again it will if you if you can if you say that you feel felt anxious multiple times on here then you know that you need to go and work on uh anxiety. So that might be sort of like breathing techniques when you're in a trade you know doing mindfulness meditation all these sorts of things.

If you can identify the emotions that you're feeling in a trade, you can then work on practical techniques um on how to not eradicate them because that's wrong. Okay? You can't eradicate emotions. They are natural parts of us.

But working on um with them, recognizing them, but not allowing them to impact your trading, okay, and impact your trading decisions. Uh and trade notes. Again, this is something that if you can spot repetitive patterns within your your trading, whether you scaled out too early, whether you took half profits too early, whether you were too greedy, whether you moved your stock, whether you moved your target.

If you if you um notice this happening regularly, again, you have something that you work and work on and you need to rectify a process that you're falling away from in your trading that you then need to uh to work on. Okay? And that's why I would put these filters on. I would play around with them, you know, spend some time uh like I say every week, every month and certain uh just to sort of like analyze the data.

Obviously, you know, the more data points you have, the better. Um and that takes time to build up, but um it will benefit you in the long run. Okay, so hopefully this has um reinforced or shown you why having a journal is so important. So many beginning traders neglect this part of it. they don't think they need to do it.