Becoming a Great Stock Trader

Journaling is the Seminal Act to Become a Great Stock Trader

By ProTrader Alpha

Journaling a task so simple is shunned by so many; a forgotten, avoided activity that separate the great from not-so-great traders.

So why don’t you journal and learn?

Don’t have time?

Don’t know how?

Keep it all in your head and don’t need to write it down?

Afraid to tally the score and see the facts about your trading?

All are poor excuses. Most professionals journal. Chefs, CEOs, golfers, fishermen, and football players are examples of professionals who journal.

Why do they journal?

Simply to learn and to get better.

So why don’t you journal?


One of the best books on Trading is ‘The New Trading for A Living’ by Dr. Alexander Elder (Wiley Trading Series: ISBN 978-1-118-44392-7).

Dr. Elder, a famous professional trader and best-selling author dedicates a chapter to how to maintain a Trade Journal. He refers to the Trade Journal as “diary entries [that] serve as your “extra-cranial memory, a tool for building the structure for success.”

He proclaims three key benefits from journaling. First, immediately after you start a journal you will have a greater sense of “order and structure”. You will be capturing the conditions surrounding your trades. Second, with time you will have the history and basis to see trends. Third, your learning curve will begin and accelerate, probably at an exponential rate, with your study and review of the trades. A key point made by Dr. Elder is “keeping a detailed trade record feels burdensome – but that’s what serious traders do.”


Mark Douglas wrote the book titled “The Disciplined Trader: Developing Winning Attitudes” (New York Institute of Finance: ISBN 0-13-215757-8). Douglas’ focus is on the mental part of the trading game and how to develop a winning mental model. He proclaims there are formidable psychological barriers to become a successful trader. My favorite passage in the book is:

“If you don’t know what you did to win the last time, you obviously don’t know what to do to keep from losing this time. The end result is intense anxiety, frustration, confusion, and fear. You feel out of control, experiencing a sense of powerlessness as you are swept along by the ensuing events and wondering what is the market going to do to you today.”

Douglas emphasizes the importance to monitor yourself and develop self-discipline. Journaling your trades will increase your self-awareness and is a critical self-discipline.


Keeping a journal can change your life according to Andrew LaCivita who is an award wining author and inspirational speaker. LaCivita is driven to helping people and corporations realize their full potential. His YouTube video titled ‘Keeping a Journal That Will Change Your Life’ discusses how he keeps a journal and his personal daily questions to keep him aligned to his goals. While LaCivita’s wisdom is more career based, his strategy of daily introspection and learning can be easily applied to the business of stock and option trading.


I started journaling one year ago and it has dramatically changed my trading…for the better. I tried journaling before, short periods of attempting to track my trades. A spreadsheet here, a trade log there, but nothing regimented, everlasting, and truly honest. Nothing that forced me to capture my reasons and conditions for the trade. Nothing to capture lessons learned from a bad trade. Nothing to enable me to learn.

Why did my past attempts fail?

Because I was lazy and afraid. I didn’t want to put forth the effort. Afraid that I would discover I wasn’t good at trading. Afraid that someone might see my journal. But primarily afraid I would document failure.

Who wants to document their own failure?

One bad trading habit that journaling helped me stop was pre-market trading. I found myself chasing hot stocks in the pre-market and about 50% of the time I would see the stock quickly rise and then decline below my entry price in the 30 to 45 minutes before the market opened, often falling further after the market opened. So, I entered a good trade that quickly became a bad trade.

By journaling I recognized several pre-market conditions that I should avoid and some conditions to capitalize on.

First, since I was journaling my trades I was able to look back at every pre-market trade and determine patterns.

For example, hot stocks tend to rise on press releases and earnings during the pre-market from 6 am (CT) to about 7:30/8:00 am. Then those stocks decline between 8:00 am and 8:30 am and often decline further after market opened at 8:30 am. So, I wrote a ground rule not to trade pre-market.

Even though I had the new ground rule I made a few more pre-market trades without a high consistency of profits. I would chastise myself, in writing, in my trade journal, harshly asking myself why did I just trade pre-market when I just established a trading rule not to trade pre-market.

But there were conditions when pre-market trading was profitable. Reviewing my pre-market trades I established some enhanced and restrictive pre-market trading rules based on volume, price, and time of day.

A key aspect of my learning and now one of my critical trading rules is the necessity to take quick profits. Through my journaling and learning from journaling I corrected a bad habit and then tailored a set of trading rules that have produced consistent pre-market trading success. I would have never accomplished my rule based pre-market system without journaling.


Here are my take-aways to consider:

Start – No more excuses! Begin today; the journal doesn’t have to be perfect. Don’t let the desire for perfection be the enemy of initiating the proven success tool of journaling.

Be Honest – Don’t just capture the trade, your broker does that for you. Truly document the environment of the trade, why you made the trade, and most importantly what did you learn from the trade.

Review – Review your journal on a regular basis. For some that might be daily…Others might benefit from weekly review. Establish a routine to read about your lessons learned and apply those lessons to future trading.

Feel Good – Take pride and celebrate your journaling success.

Journaling is the seminal act to become a great stock and option trader. So why don’t you learn to journal and journal to learn?

Profitable Trading!

ProTrader Alpha

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