Trading Journal: The invaluable tool for traders

Trading Journal

Mastering Your Trades: The Essential Trading Journal Guide

Updated May 15, 2024

We will start by listing a series of quotes from recent market updates. If you have not kept a trading journal, then while you read these excerpts, jot down what comes to your mind or try to visualize how you felt during the past few months, especially on down days. The geopolitical landscape has changed forever, and from now on, geopolitics will have at least a 30% impact on market action.

There is going to be no fixed formula that will work in the future. Why? The big players have so much money now that they delight in creating new narratives and generating new outcomes. Market Update December 27, 2021

This does not mean one cannot make money in the markets, and one can still determine optimum moments to go long or short using M.P. and Technical analysis. However, one needs to understand the difference between bottoming/topping action and timing the top or bottom. Timing the precise bottom or top is an act best reserved for fools.

Unleash the power of MP with a Trading Journal.

M.P. is not based on a set formula. Mass Psychology analyses the erratic nature of this creature, otherwise referred to as the human. Human beings are notorious for letting their emotions do the talking. When emotions do the talking, money flies out of one’s pocket and into the pocket of the top players. Instead of fighting the top players, ride on their coattails. Market update January 11, 2022

It appears likely that the market will experience two corrections this year. The first one, which could already be underway, is expected to occur in the 1st quarter. The 2ndone is more likely to occur towards the end of the 3rd quarter to the 4th quarter. Which crash ended the market? Which crash proved to be the end of everything? Ask yourself that question to yourself the next time you panic. Every crash proved to be a tremendous long-term buying opportunity. There is not one person, alive or dead that can prove otherwise. Market update January 11, 2022

The anxiety gauge has moved into the hysteria zone, almost touching the extreme zone of madness; this happened only once in March 2020. Bullish sentiment is at an unheard level of 18. Right now, 82% of participants are either scared or sitting on the sidelines, waiting for a better tomorrow. Market Update January 24, 2022

Investors win while speculators fry

The difference between an investor and a speculator (though most will deny being speculators) is that speculators monitor their portfolio daily and view 12 months as long-term investing. Additionally, when the stocks they dreamed of purchasing pull back, they baulk and wait for even lower prices. Their lives are nothing but a never-ending loop of regret. If one examines their results over ten years, these chaps almost always severely underperform the markets. Long term investing is not based purely on timelines but on trends. If the trend is positive and the masses are in a state of disarray, pullbacks should be embraced. Market Update February 1, 2022

This week’s bearish sentiment hit a new multi-year high. So we have two revolutionary developments taking place within one week of each other. Experts are overreacting to the possibility of minor interest rate hikes, and the market is now trading in the extremely oversold ranges on the weekly charts. Suppose the markets experience another wave of selling next week. In that case, it could push the needle on the anxiety gauge even deeper into the madness zone than it did in 2020. Market update February 1, 2022

Is volatility here to stay?

While we expect higher volatility this year, we also expect to accumulate many outstanding companies. In 24 months or less, individuals will be shocked at the gains some of these plays will produce. Remember, we got into GOOGL at 1300 and closed a position on a multi-billion dollar company for a profit of 75%. We expect similar opportunities and more over the next 24 months. Market update February 1, 2022

The Russel 2000 is filled with more speculative stocks, and it tends to top and bottom before the other indices. The selling is almost done as most speculators are undisciplined and have no staying power. The typical pattern for the MACD indicator is to swing from oversold to overbought ranges (bullish and bearish cycle). We refer to the above pattern as a triple-bottom MACD formation. It never completed the normal cycle. Hence it is likely that the next bullish MACD crossover will lead to a strong upward move. Market update February 17, 2022

The MACDs are dangerously close to completing a bullish crossover on the weekly charts. This crossover takes time to complete, which suggests that the markets should rally for several weeks on completion.

Stronger Deviations Should be embraced.

Until the trend changes, the stronger the deviation from the norm, the better the buying opportunity. That is the end of the story. Market Update February 28, 2022

The best way to determine the onset of Operation Massacre will be to monitor sentiment levels. If the masses are euphoric (extremely high bullish readings), it would indicate that the end is nigh. Market update March 9, 2022

On a separate note, the number of New 52-week highs refuse to take out their Jan-Feb lows, so we have yet another positive divergence signal. Market update March 9, 2022

The needle on the Anxiety gauge is now at the same level as it was during the peak of the covid crash, a striking development indeed. Market update March 9, 2022

Conclusion 

keeping a trading journal is an essential tool for successful investors. Today, it remains just as crucial. Imagine being a Tactical Investor subscriber, and while reading the quotes and notes in your journal, you can make detailed cross-references. A trading journal gives you a clear picture of how you feel at any given point, which is invaluable in making informed decisions.

Without a trading journal, it’s easy to fall prey to the mass mindset, which tends to manifest during periods of extreme stress or volatility. You can avoid falling into this trap by keeping track of your emotions and decision-making process. Becoming aware of this process takes practice, but a trading journal can help you develop the necessary discipline.

A trading journal can still be helpful even if you’re not a Tactical Investor subscriber. It provides a historical record of your trades, allowing you to track your progress over time. By reviewing your past trades, you can identify patterns and mistakes and adjust your strategy accordingly.

The last few months have been an ideal time to maintain a trading journal, given the extreme market volatility caused by the pandemic. By keeping track of your emotions and thought processes during this time, you can learn from your experience and improve your trading skills. A trading journal is a valuable weapon in your arsenal, and by using it consistently, you can become a better investor.

Originally published March 2022 and Updated March 2023

Enrich Your Knowledge: Articles Worth Checking Out

What is the bandwagon effect. Silly people following Simon

What is the Bandwagon Effect? Exploring Its Impact

What is the Bandwagon Effect? Unravelling Social Influence & Cognitive Bias Updated June 18, 2024 The bandwagon effect is a ...
Stock Market Crash Forecast: Ignore the Hype, Focus on the Trend

Stock Market Crash Forecast: Ignore the Hype, Focus on the Trend

Stock Market Crash Forecast: All Rubbish, Focus on the Trend June 17, 2024 The stock market crash forecast is an ...
The Stock Market Forecast for Next 3 months: its better than you think

Stock Market Forecast for Next 3 Months: Trends to Watch, Predictions to Ignore

Stock Market Forecast for Next 3 Months: Trends Over Predictions Updated June 17, 2024 Before embarking on the endeavour to ...
Benefits of Investing Early: Building Wealth and Achieving Peace of Mind

Benefits of Investing Early: Wealth and Serenity

Benefits of Investing Early: Building Wealth and Achieving Peace of Mind  Introduction: The Transformative Power of Investing Early Investing early ...
Why is Inflation Bad for an Economy: Enriching the Few, Hurting the Many

Why is Inflation Bad for an Economy: Enriching the Few, Hurting the Many

Why is Inflation Bad for an Economy? Feeding the Rich at the Expense of the Poor June 12, 2024 The ...
What to Do When the Stock Market Drops: Buy Big

What to Do When the Stock Market Drops: Back the Truck Up and Buy

What to Do When the Stock Market Drops: Buy Big June 11, 2024  Introduction: Embracing Market Crashes with a Contrarian ...
Small Dogs Of the Dow

Unleashing the Power of Small Dogs Of the Dow

Small But Mighty: Unveiling the Power of Small Dow Dogs Updated June 08, 2024 In the intricate world of stock ...
Stock Market Chaos: A Trap for the Ignorant and Uninformed

Stock Market Chaos: A Trap for the Ignorant and Uninformed

Stock Market Chaos: The Peril of Ignorance and Misinformation June 7, 2024 The Folly of the Masses Throughout history, the ...
Dow Jones Forecast: Wild Swings and Market Surprises Ahead

Dow Jones Forecast: Navigating the Ups and Downs

 Dow Jones Forecast: Navigating the Waves of Opportunity June 7, 2024 In the treacherous waters of the financial markets, where ...
Vanguard High Dividend Yield Fund: Navigating Income and Growth for Smart Investors

Vanguard High Yield Dividend Fund: Elevate Your Returns

Vanguard High Yield Dividend Fund: Boost Returns Now! June 06, 2024 The Vanguard High Dividend Yield dividend fund (VYM) is ...
Common Sense Investing Book: Ironically, It Isn't So Common

Common Sense Investing Book: Ironically, It Isn’t So Common

Common Sense Investing Book: Why Common Sense is Surprisingly Rare June 2, 2024 A Journey Through the Labyrinth of Financial ...
Stock Market Long Term Trends Success equates To Discipline

Stock Market Long Term Trends Success equates To Discipline

Stock Market Long-Term Trends: Success Equates to Discipline Updated June 01, 2024 Navigating the stock market is akin to sailing ...
Navigating the Stock Market Forecast Next 6 Months: Strategies for Success

Analyzing Trends: Stock Market Forecast for the Next 6 Months

Stock Market Forecast Next 6 Months: Analyzing Trends and Predictions Updated May 31, 2024 As we consider the stock market ...
Market Opportunity: Embrace Crashes Like a Lost Love

 Market Opportunity: Embrace Crashes Like a Lost Love

Market Opportunity: Thriving in Chaos and Crashes Market crashes are akin to the explosive return of a long-lost love—a reunion ...
The Power of Negative Thinking: How It Drains and Devastates You

The Power of Negative Thinking: How It Robs and Bleeds You

The Power of Negative Thinking: How It Drains and Devastates You Updated May 2024 When the market trend is positive, ...