6 Reasons Why You Should Have A Trading Journal

November 12, 2017 0 Ankit Shrivastav

Introduction:

There are many advantages of having a journal, it allows you to keep a record of your life, all major events that shape or change you as a person, memories that are close to your heart and lessons, that are important for life that help you evolve as a person. A journal also allows you to record some very personal experiences that you may or may not want to share with others. In short, a journal is a record of your entire life’s journey, you trials and errors, hits and misses, and most importantly, your emotions that you go through during this time.

Just like a life journal, an investment journal also lets you record your investments, and allows you to keep a track of reasons behind why you made that decision. Having an investment journal has many advantages, some of them are listed below:

Helps in researching stocks:

An investment journal could be of great help if you are researching a stock for your investment. An investment journal will help you discover companies that suit your investment style and philosophy, and track it frequently, helping you measure its performance against your expectations. Once you find an interesting company, write down all that you know about it, its business, revenues, profitability, valuation, and your expectations from it. This will help you keep an eye on the stock, helping you stay updated about latest developments and how it will influence the business and your investment in the future. Also, do not forget to write down the the price at which you find it an interesting entry point, this will help you a lot in making the right buying decision.?

Keeps track of your investment goal:

All of us invest money with a specific goal in mind, whether it’s retirement, funding our childs education, saving for a long holiday, or simply to create a passive source of income. Every investment goal has a specific amount that you need to achieve.

An investment journal is a great way to keep track of your goals on the go. While writing down your investment goals gives a visual manifestation, writing your goals down makes it more specific and time bound. This not only helps you keep motivated, but also allows you to keep track of how you are progressing towards them. In case you are falling short, you can always take necessary actions to make sure you achieve them within the specified time.

Keeps record of your achievements and mistakes:

All of us make mistakes, what sets apart successful people from unsuccessful people is that you learn from your mistakes and improve yourself to be better at what you are doing. If we do not learn from our past, there is a good chance we will make same mistakes once again and face the same fate. An investment journal is a great way to keep record of past mistakes made and lessons learned from them. This does not mean that an investment journal will always criticize you all the time. A journal written in detail will also give you a record of great achievements from the past, something that you should be proud of.

Helps you maintain rationality in investing:

Stocks arent lottery tickets. Theres a company attached to every share. -Peter Lynch

The above quote by Peter Lynch explains in the best possible way, why it is a must to think rationally before investing. Making an investment without any logical reasons why the stock will appreciate is like buying a lottery ticket and hoping to win. A stock grows and appreciates because the business behind the stock is doing good and making more money. If the business does well, stocks will eventually follow. By maintaining a detailed investment journal, you can write down logical reasons why, the stock will see growth in the future.

Writing in detail about the business of the company, its position in the market, earnings profitability, past performance and future growth potential will give you a clear idea what you can expect from the stock in the future and if it is a good investment at the current levels.

Can be used as a guide for future generations:

A journal could be a great guide for your future generations to learn investing from your experience. Just like we learn from successful investors like Warren Buffett, Peter Lynch and others, our investment journal will be a great source of guidance and inspiration for future generations. Not just that, it will also help them avoid costly mistakes which you have made in your life, helping them learn and avoid them to become even more successful in their lives. Your journal could be a great mentor for anyone willing to learn from you and become successful.

Gives you something you can be proud of:

A great investment journey is like a great life lived, and having it documented in a journal is the best way to look back at and be proud of. When you achieve your investment goals and look back the the history, it will make you proud of the journey you had. Its not just about the money you made, the road you traveled, its about the process, the learning and the way it shapes you as a person. Having an investment journal allows you to look back in time, your journey and how things unfolded, this feeling will fill you with pride, and you will have a story to share with people of next generation. Who knows if someone gets inspired and becomes successful like you.

Conclusion:

A journal is not just limited to recording your research and views on a stock, it is a complete history of your journey, your emotions, experiences, and learnings. HAving an investment journal is not just useful but a valuable work of your entire lifetime summed up in few hundred pages. Every Time you read your own journal, there will be a lot of instances and experiences you will encounter that will add value to your future decision making. Not just that, reading your journal could be a great source of inspiration if you’re feeling down and unmotivated. It will help you avoid the mistakes you made in the past and fill you with hope for future. Try it, start writing about your view and experiences on investing and life, maintain it for few months, it costs you nothing but brings great value to your life, the best value investment you will ever make.