It's the single most important tool he's given to his clients, says Doug Hirschhorn, PhD, and market coach.
Video: Market Coach Doug Hirschhorn, PhD, discusses how to create a trader's journal.
It's a trading journal and it can help investors create a plan of attack, structure trades, stay focused throughout the day, see patterns that help avoid slumps and, perhaps most importantly, remain objective in your trading decisions.
Hirschhorn says there are six steps to keeping a trading journal:
- Identify your game plan for the day. What are the opportunities and what will make you the most money?
- Analyze what you did well. What did you do to optimize your positions?
- Take an objective look at what you did poorly. What were my mistakes and how can I improve that process?
- Look at the day's lessons. Use the information on what you did right and wrong to help grow as a trader. Ask yourself what lessons did the market teach me today.
- See what's working for you. Figure out what's making you money in the market as opposed to what's costing you money. Change your focus to the former.
- And determine your game plan for tomorrow. This helps build momentum going into the next trading day.
Committing to a journal, says Hirschhorn, is a surefire way to help improve your trading success.
Doug Hirschhorn is the chief executive officer of Edge Consulting, a firm specializing in “Peak Performance Coaching.” He holds a Ph.D. in Psychology with a specialization in sport psychology, and has offices in New York and South Florida. His client list includes elite athletes as well as many of the largest banks, hedge funds and financial institutions in the world. Doug is presently at work on his new book, 8 Ways to Great (Putnam, 2010).
Have a question for Doug? You can reach him through his Web site, DrDoug.com
Disclaimer: Doug Hirschhorn's expertise is in the psychology of achieving peak performance. He is not a financial advisor and does not make trading or investment recommendations or provide trading or investment advice. He is an expert on the mental game. Although Doug Hirschhorn has a Ph.D. in Psychology with a specialization in sport psychology, he is not a licensed psychologist and does not provide therapeutic, clinical or counseling services.