If you are looking for a way to increase your income, you should definitely consider investing in the capital market. This is mainly because you can earn a healthy return on your investment without necessarily setting out a huge capital outlay. And when you consider the fact that your don’t need advanced skills in order to be a successful trader, it is easy to see why it is currently one of the most beginner-friendly investment opportunities in MENA Region.
However, opting to invest in stocks is not a guarantee for success. For beginners who are using Saxo, taking steps to avoid common trading mistakes is the key to having success. And one of the best ways to do this is to create a trading journal. The following are tips that will enable you to use journaling as a way to shield yourself from making costly investment mistakes.
Keep a detailed history of your stock trades and results
Creating a detailed stock trading strategy and sticking to it is a great way to increase your odds of success. However, as a beginner, there is no way of knowing how well your strategy is working. Since you cannot rely on experience to tell whether circumstances have changed, or whether you relied on faulty assumptions, it is always advisable that you keep a detailed journal of your trades and the effect that the trades have on your portfolio.
Recording the price at which you bought into a given stock when you sold the stock, and the strategic reasoning for these reasons will allow you to adjust your strategies based on actual results. This is because you will be able to compare expectations against the actual returns, something that will definitely boost your odds of success.
Always detail your emotions during and after a trade
One of the most important benefits of keeping a stock trading journal has to do with helping to prevent emotional trades. When trading stock, especially if you are a beginner, it is easy to make trades out of panic, greed, or any other emotion that you are susceptible to. Since emotional trades are a leading cause of failure among beginners, identifying and dealing with these emotions plays a key role in making you a successful stock trader.
Therefore, when making entries in your journal, you should include details of how you felt before and after the trade. Take notes on the effect that these emotions had on your, and then note the end results of giving in to your emotions. With time, you will start to observe trading patterns and how your emotions keep you from sticking to your strategy. You can then use this information to set up fail-safes against your emotional trading mistakes by creating trading stops and other automated trading moves that will help to reduce the effects of emotional trades.
Write down your reflections on charts, trade data, and notes
It is never enough to just make mental notes and observations of what your journal reveals. To get the most out of your journal, make sure that you always include a review of all the data and information contained in your journal. In your reviews, you should note aspects of your trades that need to be improved, changes that you need to make as for as your trading rules are concerned, your analysis and conclusions on your trading habits, and potential bad habits that you need to change.
Writing down your observations will give you the opportunity to process all the details of your stock trading journey, your progress, and ways in which you can improve your skills as a stock trader. Also, since you will have your reflections written down for future reference, you will be able to assess and improve your ability to review your decision-making abilities. This is something that will go a long way towards making your a better stock trader.
Keeping a good trading journal is necessary if you want to avoid mistakes that most stock traders make. Therefore, by using these tips, you will improve your chances of having a successful trading career in the