Lesson 5 of 6 · Trading Psychology
Journaling
A journal is a database, not a diary.
Your journal is the only tool that shows you what you actually do versus what you think you do. Memory is unreliable and self-serving. Logged data is not.
Log the plan, not just the result.
For every trade, record the entry, stop loss level, and target before it opens. The chart shows what you planned. Your notes show what actually happened and why they differed.
What to log.
Before the trade: setup type, entry trigger, stop level, target, and position size. After the trade: actual exit, outcome in R (not dollars), what you felt during the trade, and one honest note on execution. Keep it short. You will not keep a complex format.
After 40 logged trades you notice you exit at 1R consistently and let losses reach 2R. This tells you:
Show the answer
C. You have a pattern of cutting winners short and holding losers long. Cutting winners at 1R and holding losers to 2R destroys expectancy: you would need over 67% winners just to break even. The journal surfaced what memory would have hidden.