Journaling: The most important part of trading

Welcome, traders, to what might be the most important piece of writing you'll read this month. Are you someone who trades based on price action? Do you execute multiple trades per week, or even just a handful per month? Are you looking for ways to increase your edge and improve your long-term success? If so, this article is here to help you do just that.

Today, we're diving into one of the most powerful yet overlooked tools in a trader's arsenal-journaling-a practice widely recognized as the number one factor that separates profitable traders from those who fail.

Trading is notorious for its high failure rate. It's often said that 90% of traders lose, 5% break even, 3% make small profits, and only the remaining 3% make enough to replace a job. These statistics paint a harsh reality that traders will struggle to be consistently profitable. But these numbers don't define you. They simply reflect the majority who fail to take the right steps to improve. And one of those key steps is maintaining a trading journal.

Regardless of whether you trade intraday, swing trade, or invest for the long haul, data and self-awareness are everything. A trading journal isn't just a place to record wins and losses, rather it's a tool to track patterns, refine strategies, and stay accountable to a well-thought-out process and systems.

Markets are unpredictable, and even the best traders operate with win rates hovering between 40-50% on average. Factor in human emotions, mistakes, and overconfidence, and it's easy to see how that win rate can drop even further. This is why we need a structured way to analyze our performance and ensure we stay disciplined and focused.

So, what exactly is a trading journal, and who is it for? A journal is for every single trader, period. Whether you're just starting out with a small account or managing seven figures in capital, journaling is a non-negotiable part of the path to profitability. Today, we're going to break down why it's so crucial, how it directly impacts your trading results, and how to use it effectively to elevate your game to the next level. There are almost no long-term profitable traders that don't journal their trades.

So, now that you know a bit of background on why we are writing this here is what we will cover in the rest of the article:

• Psychological Benefits
• Performance Benefits
• What type of Trader are you?
• & Next Up in the Series

So grab a cup of coffee, get comfortable, and read on!

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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Psychological benefits

Journaling has an insane breadth of benefits but to start we will focus on the psychological ones. The first two benefits we want to look at are self-awareness and emotional control benefits. When journaling comes into play there is a huge increase in these areas. This is because when you have a way to see exactly what you are doing and why it allows you to better see how you yourself work throughout the trading process, therefore boosting your self-awareness.

Emotional control also gets boosted here because a journal helps see what properly managing your emotions can do for you, like better following your plans for example. But it can also show you the negatives of letting your emotions run wild like recklessly increasing your size and taking substantial losses.

It also helps reduce trading-related emotions like stress, anxiety, greed, FOMO, and impatience. This is again because it allows you to see what has happened, what's worked, and what hasn't worked. Fear for the most part is the opposite of knowing. Stress, anxiety, FOMO, and greed rise in fearful or uncertain situations, and with enough data in your journal, this problem goes away.

You can clearly see how often your system wins, and loses, how much size you should use, etc. This all helps reduce stress and anxiety that is trade-related because it allows you to only focus on your system, because everything else, probability-wise, is already known.

Another point is that our brains have two sides that think differently, and understanding this is another crucial thing for trading. The left side of our brains is analytical, logical, and structured, and mostly helps with data analysis, risk management, and executing trades based on a plan.

The right side of our brains is more intuitive, emotional, and creative, which, yes, can sometimes be useful but also leads to things which are predatory to our trading such as impulsive decisions, overconfidence, or hesitation when fear creeps in. This is where journaling becomes essential.

By writing everything down and having data along with past experiences to refer to you give your left brain concrete data to work with while allowing your right brain to recognize emotional patterns. This helps you see exactly when emotions cause bad decisions and reinforces the importance of sticking to a system.

Lastly, it helps in building mental resilience. This is through the benefits of discipline, and again, the calmness and peace data gives you. Mental resilience increases with discipline because it makes your mind stronger due to forcing yourself to do the right thing, no matter what the sum of your trades is.

Rain or shine, you get the same things done. It also increases with calmness and peace because it leaves you less open to negative thoughts, as once you see exactly how your system works over time you become at peace with each trade because you know that over time your edge will prevail.

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Performance benefits

The next slew of benefits are less mental and more performance-based. As we saw previously, there is a gold mine of benefits just on the psychological side alone so keep reading for more gems. The first thing that journaling helps with performance-wise is that it allows you to properly identify your strengths and weaknesses. This is done through, as we've been saying, data collection.

Through amassing data on how your trades go, what you do during trades, how you enter them, and how you exit them. You will very quickly be able to see what things work and what things don't work. This could be through finding sizing issues, time-based entry issues, certain patterns not working out, not reading the HTF correctly, you name it. At the end of the day it will help you see what to do more of and what to do less of.

The next thing it helps with is properly tracking key performance metrics. This means things like win/loss ratios, average R per setup, what sessions you win most in, or even what setups work best. Through this, you can make professional decisions to increase your win rate and profitability. For example, if you see that over time your win rate slides to 20% past 1 pm then logically you can drastically increase your win rate by not trading past those times.

Lastly, it will also help optimize your risk management. This happens through being able to clearly see what risk management you are doing / not doing and working on it. For example, you can see that if you risked a fixed % per trade instead of changing the % based on what you feel your profitability could increase.

Overall, the benefits are very expansive and there isn't one con to journaling. A famous quote comes to mind to finish this section off, what is not measured cannot be managed. However, let's improve on this quote a bit: What isn't measured can not be managed and improved.

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How to journal for long-term success

Now that we know the psychological benefits and the performance benefits, let's talk long-term about what we can expect. To start a definite benefit from long-term journaling is better and more refined systems.

This means that through the constant tracking of how your system works, you will literally be able to make it work better. This could be through taking less trades at certain times, taking stable risk across all trades, using wider stops, trading a specific pattern, you name it. At the end of the day the more you measure and collect data on your system the better it will inevitably become.

The next long-term benefits actually ripple outside of your trading life but into your life as a whole and it reaches back into the first section. The long-term benefit is increased discipline and accountability.

Having something that you must do rain or shine, profit or no profit, will over time train your brain to get done what it needs to get done no matter what happens. This mentality doesn't just benefit your trading but clearly your life as a whole. Secondly, it increases your accountability.

There is an odd thing that happens with people and they tend to be accountable with most people but themselves and having a trading journal that you must be honest with and real with will give you an outlet to become more accountable.

Knowing that no matter what, you have to come clean about what you do trading-wise to the journal long term will make you make better solid choices in the game.

The last long-term benefit is something we mentioned lightly in the beginning. Journaling gives you an edge over 97%. This means that through journaling you are already that much ahead of the large majority of traders.

This may sound simplistic but in reality, it is quite deep. The best way to get results that the majority don't get is to do things that the majority don't do. And, journaling is one of those things.

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What Type of Trader Are You?

Short-term trader

Let's start off with what exactly is a short-term trader more commonly referred to as a Day Trader. A day trader is someone who typically enters and exits trades within the same trading day, but can also be a while longer up to a couple of days. The whole idea behind it is to capitalize on short-term price movements.

Day Traders typically rely on technical analysis, chart patterns, strict systems, and rapid decision-making to execute their trades, and typically they use large positions as they tend to trade small price movements, relatively speaking. Because of the smaller time frames and quicker decisions needed, day traders must be highly disciplined, decisive, and emotionally resilient. They also need to thrive under pressure, maintain intense focus, and have very strict risk management systems to protect their capital.

Long-term trader

Long-term traders, also called swing or position traders, typically hold trades for extended periods, usually from weeks to months. The main goal behind this type of trading is to capture larger price movements and benefit from large market trends and macro trends.

Unlike day traders, swing traders usually focus on fundamental analysis, studying macroeconomic trends, and sometimes even industry developments. As a swing trader, you must have patience, strong analytical skills, and a high level of emotional control to withstand market fluctuations without closing or messing up your positions.

A key trait that swing traders must have is conviction-they have a well-researched strategy and the discipline to stick with their plan despite short-term volatility because as positions mature it gets harder to keep them open, especially as PNL fluctuates.

What's next in the series?

Now that we've covered the foundational importance of journaling, stay tuned for when we take things a step further. In the next article, we'll dive deep into how day traders should approach journaling-showing you exactly what to track, how to structure your journal entries, and the best ways to analyze your data.

We'll also provide templates and recommended platforms to make the process smooth and easy, so you can start implementing it immediately. Whether you're a beginner or already tracking your trades, this next piece will ensure you're using journaling the right way to refine your edge and maximize your profitability. Stay tuned!

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Cryptonary's take

At the end of the day, trading comes down to probability, discipline, and self-control. The reality is that the majority of traders will not succeed, but by doing things like journaling, we can improve our chances by quite a bit. Journaling is a key step in becoming a better trader over time. It lets you observe your failures, construct a stronger mental game, and make your execution better over time.

By now, you know that journaling is a key aspect of a trader's life. We looked at how it strengthens your psychological resilience, improves your emotional control, and with the data it provides allows you to sharpen your edge. Over time, it moulds you into a trader who executes with confidence, discipline, and precision, which are traits that separate the top 10% from the rest.

If you're really set on being a profitable trader every time, journaling isn't an option-it's a necessity. The next article will teach you how to journal effectively as a day trader with practical tools and insight that will maximize your improvement. Until that happens, start thinking about how you can use journaling in your trading and remember, that which cannot be measured cannot be managed.

Peace!

Cryptonary, OUT!

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