A trading journal is a structured record of every trade a trader takes, including entry, exit, sizing, and the reasoning behind the decision, and it's what separates deliberate trading from gambling on outcomes. Without one, it's nearly impossible to tell whether a winning stretch reflects real skill or simple luck.
What to record for every trade
A useful journal entry goes beyond just profit and loss. It notes the specific setup that triggered the trade, such as a daily floor S1 bounce or a 4-hour Wyckoff spring, so patterns across similar setups become visible over time. It also records the R-multiple, meaning how many units of initial risk were gained or lost, which lets trades of different sizes be compared on equal footing. Just as important is an honest note on execution quality: whether the plan was followed exactly, or whether the trade was entered too early, exited too late, or otherwise deviated from what was planned. Tracking MAE and MFE, the furthest the price moved against and in favor of the position while it was open, adds a further layer of insight into whether stops and targets were placed sensibly.
Why weekly audits matter
Reviewing every closed position at the end of the week, rather than reacting to individual trades in the moment, gives enough distance to spot patterns that aren't obvious day to day. Filtering the journal by setup type usually reveals that a small number of strategies account for most of the profit, while others are quietly bleeding capital. The discipline is in acting on that data: cutting the setups that consistently underperform and putting more size behind the ones with a demonstrated edge, rather than continuing to trade everything with equal conviction out of habit or attachment.