Home / Stop Looking For Different Trading Systems. Make The One You Have Work. This Is How.

Stop Looking For Different Trading Systems. Make The One You Have Work. This Is How.

“Why do I need a trading journal when I just need to find a better trading strategy to become a winning trader?” Or, “what is the use of a trading journal if my method is not working?” These are common questions we get asked a lot. We found that there is a huge difference between losing and winning traders that we have come to known working with hundreds of different traders.

Whereas the traders who are struggling and have inconsistent trading results always look for “better systems” or more accurate entry signals, the traders who make money consistently try to improve the one trading strategy they already have. The winning traders didn’t just stumble over a winning trading strategy, but they found ways to turn their strategy into a winning one. How?


Your trading strategy and your trading journal go hand in hand

Obviously, a trading strategy is necessary to trade. A strategy tells you what to do and when to do it and it also defines the risk parameters. However, trading without a trading journal is like driving a racecar and crashing in the same curve again and again and again without trying to find reasons. Were you too fast, did you take the curve in a too steep angle, did you drive with the wrong tires? If you don’t observe what went wrong and try to find ways to overcome your problems, you will keep crashing.

A professional trading journal is the component of your trading that shows you what is not working. It reveals your greatest and most costly mistakes and it provides actionable tips how to lose less and how to win more.


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To be more specific, here is how a trading journal helps improve your trading strategy:

1- It identifies your greatest mistakes and calculates how much you are leaving on the table by repeating mistakes. Finally, it shows you when you are most likely to make a mistake so that you can be aware of this and avoid it.

2 – A trading journal analyzes how you place stop loss and take profit orders. If you are setting your stops too far away, you are reducing the ratio between winners and losers. If you set your stops too close, stop hunting and retracements can take you out. Take profit targets which are too far away result in a lower winrate and targets that are too close cut your winners short. A trading journal analyzes your order placement automatically and takes out the guesswork.

3 – Once in a trade, most trading strategies do not provide detailed and actionable tips on what to do with your trade. A trading journal analyzes your trade management and then shows you how to engage with your trades to maximize your profits.

4 – An important part of a trading strategy is risk management and position sizing. A trading journal not only analyzes whether your positions are too small or too big, but it also provides insights about how different position sizing strategies impact your account volatility.

And the list goes on. Traders who trade without a trading journal are just hoping to somehow, accidentally find a trading strategy that works. The traders with a trading journal make their own luck and turn their strategy into a winning one.


The one mistake that is keeping traders from profitable trading – riding the learning curve

Everyone knows those traders which have been involved with the markets for years, but who are still struggling and their trading results are not there where they should be. And there is nothing to be ashamed about and it is completely understandable. Most of the time, nobody has ever told them that their perception of trading is inaccurate and that they could overcome their problems by just following one simple concept: stop changing trading systems!

Frequently changing trading systems and never really committing to one thing is probably among the most crucial mistakes a trader can make. If you want to become a professional athlete you can’t start playing today tennis, then next week switch to golf and two weeks later start boxing – the chance that you will find a sport where you can be a professional right from the start are very small.

In trading it’s the same. The professional and winning trader understands that no trading strategy will work from the beginning. The winning trader knows that by constantly tweaking and making adjustments, based on what his trading journal is telling him and not by guessing, he can slowly and steadily turn his trading strategy into a winning system.

Whenever you change from one strategy to another one, you have to start from scratch. You have to re-learn how to identify entries, how to react to changing market conditions, how to set stop loss and take profit orders and find a trade management strategy. But what happens is that, instead of finding a better system, traders are caught in the vicious cycle of hopping from one system to another without ever seeing any real results.


Break the cycle and discover your edge

Now it is up to you. Most traders first have to go through the so-called system-hopping phase until they realize that successful trading is more than finding the ‘right system’. You can download our free e-book which helps you learn about the 7 step process to finding the perfect trade.

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