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5 Benefits of using a Trading Journal
Nov 01, 2020 in Trading

5 Benefits of using a Trading Journal

By: J. H. Liverstone

Any trader should have a trading journal. It is something that helps traders of any level, but how 🤔 can a trading journal help you?

In this article, we will show you how can a trading journal help you and what are the benefits of using it.

5 Benefits of using a Trading Journal:

  • A trading journal helps you identify your Strengths and Weakness
  • A trading journal helps you identify your Good or Bad Setup
  • It helps you find your Edge in the market
  • Helps you with Risk Management
  • Helps You Set up Incremental Goals

Let's take the benefits one by one and explain them in more detail.

1. Helps you identify your Strengths and Weakness

Each trader has his weakness and strengths and a trading journal can easily help you find yours.

Let me show you some charts, with trades from my journal grouped by day and hour:

Trade by Day

As you can notice I can easily see that Monday is not a good day for me to trade and Friday is my best day. Keeping track of all your trades can reveal some great insights.

Other weakness or strengths examples can be:

  • best/worst hour
  • best/worst symbol
  • best time frame (5m, 1h, 1D, ...)
  • best duration (intraday vs Multiday)
  • etc....

Any improvement you do to increase your success rate will help you a lot in the long run.

2. Helps you identify your Good or Bad setup

This is the obvious one and I think the most popular advantage. Most traders start a trading journal to find their best setup and for good reason. Investing your money in a good setup will increase a lot your portfolio value and your win rate.

Here is a report example for setups:

As you can see I can easily spot what is my best setup and I have some statistics about the setup.

Keep in mind, you need to have correct statistics about the setups. A good setup can look bad if you didn't manage the trade correctly and made a lot of mistakes.

3. It helps you find your Edge in the market

If you want to find your edge you need to be consistent and have a consistent set of actions.

Having a trading journal and doing a consistent set of actions will allow you to look back at your past trades and identify which patterns are costing you money and stop trading those patterns.

Then, focus on the ones that are the most profitable for you and you‘ll find your edge in the markets.

4. Helps you with Risk Management

A trading journal helps you see where you might be making mistakes with the handling of risk. Maybe you are taking too big of a risk for the reward you get or your average risk is too big for the value of your portfolio.

A straight forward number that I track in my journal for risk management is Average R(Van Tharp’s “R”) & Average Risk.

For example, if I risk $20 (1R) I expect to win at least $40 (2R). This will not happen all the time but my average should be at least bigger than 1 because if this is smaller it means I always risk more than I win.

My trading journal can show me this and I can focus on improving this.

5. Helps you set up Incremental Goals

This is pretty self-explanatory 🧐. If you log and measure some key aspects of your trade you can easily set goals for yourself and work on improving them.

The goals can be:

  • improve my win rate
  • lower my average risk
  • lower my mistake percentage
  • lower my average loss
  • etc...

The idea here is for the goals to be realistic. For example, if you want your win % to be 80% but you currently have a win % of 40% that will be a little bit unrealistic. But having a journal and knowing your win % you can set a goal that is achievable and realistic.

6. Other benefits a trading journal can offer

  • brings consistency
  • can be used to keep a virtual portfolio
  • makes you more self-aware regarding your trades
  • can hold you accountable


I hope now you know how a trading journal can help you and what are the benefits of having one.

If you decide to start one, which I hope you will do after reading this article I highly recommend trying AntSignals. It helps you track all the benefits we discussed and more.

Happy trading…