Every time you place a bet, you need to write down the reasons that you did so. Many traders keep a logbook which they use for this purpose. Some beginners think that the bookmaker’s record is good enough, as it contains the facts of each bet made, but there is much more to it than that.
As most of your time is spent on the computer, placing your bets, you may be tempted to keep a log in Microsoft Word, or in Microsoft Excel if you want to organise the data. This can work, and is much better than no journal at all, but you will find that many traders recommend a physical book to write in. It seems there is something more effective about actually writing down your log rather than just having an electronic form.
Whatever you decide on, your journal should keep all the records of your betting, but also your reasons for taking each bet, how you feel about the bet as you make it, and your stop loss positions. Your journal does not have to be shown to anyone else, so you can be honest in your comments. The journal is for your own use, to see what your weaknesses are, to see if a particular time of day is a bad time for you, and to re-visit the gains and losses for looking at refining the trading system you use.
You should set aside a time when you are not trading to look through your recent bets, and see how well your system is working out. Again, even with failed bets your system may not be bad, and you may have operated it properly, but unless you are averaging gains you may need to re-visit your plan and assumptions. You should necessarily rush to condemn and change your plan, however, as there will be spells of things not working out, that’s just the nature of things. And if you do alter your strategies, you should test them out again as detailed in Chapter 15 before going live. There is more about keeping a trading log in that chapter.
Money management is a vital aspect of spread betting. If you let your emotions and your account run away with you, you are guaranteed to fail. An important part of keeping a journal is that you are forced to fully consider your actions before you take them, and answer for them later, and this is likely to prevent you from making those impulsive bets that are almost inevitably doomed. Practice discipline every time you bet, and you will be better off than many of the players in the markets.