Forex trading experts achieved success in this endeavor by making use of a complete trading journal. Aside from keeping track of your ideas and profits, you should also monitor your risk management decisions and manage your emotions by including these in your trade journal. These components make a trading journal complete and useful:
First is the actual trade analysis itself. While some traders prefer either pure technical or pure fundamental analysis, you can opt to include both in your trade plan and even combine market sentiment analysis. Covering all the bases could improve your probability of winning after all. This part should have an explanation on why you predict the currencies will rally or drop.
Next is the part on risk management. When you’ve finished identifying why a currency pair will move a certain way, you should also be open to idea that your analysis will be proven wrong. In this case, you should have clear risk management plans in place in order to limit potential losses. This part should explain if you will be cutting losses early or at which point your trade idea is invalidated. You should also mention how much you are risking on the trade as a percentage of your account.
The next major component is on the time frame you will keep your orders in or your trade open. For day traders, this can be anywhere from a few minutes to a number of trading sessions. For swing traders, this can be somewhere around a few days to a number of weeks. This all depends on your trading personality and the type of trades that you usually take.
The last major component contains trade psychology updates. You don’t have to list down all your emotions at once since this could vary while your trade is playing out. Update your journal if you are feeling confident or uneasy about price action or if you are unhappy with the trade decisions you made. This is helpful in managing emotions in your trading endeavor.