Is a Trading Journal Worth it?

Yes. A trading journal is absolutely ‘worth it’.

I know, it sucks busting out another 10, 20, or 50 dollars a month for another software tool. You wonder if you’ll ever see any real change from that. Will there be any return on this investment?

Enough to make it worth the cost?

Is a Trading Journal Worth the Cost?

Let me flip this question around:

Is losing thousands of dollars making the same mistakes over and over “worth it”?

Look, I get it. Nobody wants to spend time logging trades when they could be watching charts. Or dreaming about what they’ll buy, with the trades they haven’t made yet.

And yeah, good journals cost money.

a scale weighing a pile of money representing losses from repetitive mistakes, vs a feather representing the small cost of a trading journal purchase.

But here’s the brutal truth:

Without a journal, you’re basically gambling.
With a journal, you’re running a business.

Think about it…

Would you run any other business without tracking your numbers?
Without knowing exactly where you’re making and losing money?
Without understanding which strategies actually work?

Here’s what proper journaling gives you:

Crystal-clear view of what’s actually working
Protection from emotional trading disasters
Data-backed confidence in your strategy
Early warning system for account-killing mistakes

Bottom line: A good trading journal costs less than one bad trade. And it could save your entire account.

Why Do I Need a Trading Journal?

Again, let me answer this with a question:

Would you fly a plane without instruments? Drive cross-country without GPS? Run a business without tracking profit/loss?

Trading without a journal is just as dangerous.

Here’s what you get with proper journaling:

Instant replay of your best and worst trades
Early warning system for emotional trading
Identify bad habits, so you can break them
Clear picture of what actually makes you money
Protection from account-killing mistakes
Data to support your gut feelings (or break them, if they’re bad)

On top of that, after years of use, you start to see things that nobody else sees. Because our memories just aren’t photographic like that.

Recognize patterns in your trading
See patterns that repeat across market cycles
Learn to identify regime changes and get ahead of them.

Trading Journals Can Help You Maximize Potential Profits

I joined my first prop firm in 2007. The 2008-09 financial crisis and market crash came soon after.

I had never seen anything like it. Suddenly I realized I hadn’t even known what a selloff

I made money, I lost money, made more. I took notes on all of it.

In 2019, after the longest bull run in decades, valuations were high. The market was stretched.

Mid-2019 I started reviewing my notes from 2007. I noticed things that were similar, some that weren’t. I started looking for certain patterns to arise.

I got ready for the possibility of a volatile market and the rare violent selloff that could come if some catalyst came along.

I didn’t predict a pandemic, obviously. But I was thinking ahead, because I’d seen this before and had the notes to help me.

In 2020, I started to see more familiar signs, as COVID-19 in China started getting more coverage worldwide.

As you recall, governments then began taking action that would change the economic picture, and markets reacted.

I was surrounded by two types of traders:

Those like me who had traded 2008-10 and had notes
Those who had traded it but didn’t have notes
Those who hadn’t traded it.

The traders in the first group knew what to do and adapted to the situation. They made great money. It still took some adjustment, but they had their own past insights to guide their trading.

The second two types of traders didn’t do very well. Some of them didn’t even trade much, it was too scary for them. They weren’t prepared to look for different setups.

I did, it was all in my notes. Why is that so powerful?

In 2008-09, I had made money, but not a ton. It was tough. I didn’t catch much profit short on the way down. But I learned and took notes.

In 2020, that enabled me to take advantage of the situation with confidence – and more size.

The first time you trade through a certain “type of market” you might have the same difficulty. When you see it a second time, it’s like seeing an old friend:

You can trade it with confidence based in experience
You can trade your normal size because of confidence in the familiar setups.
If you’ve grown in that time, your size should be bigger than it was the first time.
- This is how journaling your trades when your size is small can make you tens of thousands, or even millions, later.

Maybe you don’t want to trade for 12 years – but if you’re serious, why wouldn’t you? Maybe it’s hard to even think about that much time, but your future self will thank you.

This can play out in less extreme ways over shorter timeframes, too. A great example has been notes taken on FOMC or CPI release days in 2022:

There are common patterns that repeat themselves. i.e., the bi-directional stop-run right when the FOMC rate decision is announced
These are outlier days, ranges are bigger and it’s easier to make/lose more quickly.
If you’re not learning from each of these outlier catalyst days and making notes of it, you’re robbing your future self of profits.

Trade Journaling Works Like Compound Interest

You add gradually and consistently
You see small gains along the way
Years down the road the gains can start to go parabolic because you’re trading more size with much more skill.

Cartoon character looking at a rising stock or trading chart with an upward trend line. — We’ve all seen compound interest charts. Here’s one drawn by a one-eyed alien.

Why do you trade? Is your goal to have a quick spurt of profitability and then bust? Is your goal to trade for a few months and then never again?

I didn’t think so.

You want to be profitable long-term. You may want to trade for a living.

Keeping a trading journal helps you do that. And the story shows, it can have a massive impact on your career.

A Trading Journal Template Helps Save You Profits

Ever heard “A penny saved is a penny earned”?

The same is true for trading.

A point saved is a point earned.
Plugging a leak that regularly costs you a point here and there, adds up to many points saved over time.
- How will you identify leaks if you’re not making notes?
Conserving profits when conditions don’t fit your style is just like making profits. Journaling helps you identify those days sooner.

This trading journal template is here to help save/earn you money.

Journaling Your Trades Helps You Grow

Successful traders learn constantly.

They constantly seek better understanding of:

the markets
themselves
their own trading habits.

Reviewing your trading journals helps you cement the lessons learned during the trading day. It also serves as your own personal library of trading, to come back to when you need insight.

It helps you identify strengths, weaknesses, and room for improvement. It helps you catch bad habits quickly and eliminate them.

If even one of these things becomes true for you, it can be worth thousands, hundreds of thousands of dollars or more over a trading career. Wouldn’t you say that’s worth it?