Many trading journals out there are still using pips as a performance measurement.
Are you kidding me?
In this post, I'll share with you what I was looking for in a trading journal, what I was using before, and the solution that finally fits my needs.
What I Was Looking For
These were the basic features at the top of my list.
Sure, you can get some of these features on many platforms.
But I couldn't find a solution that gave me all of them in one place.
Cloud-Based Trading Journal
If you've ever had a hard drive crash on you, then you understand the value of cloud backups.
Losing hours of trading data in a hard drive crash means that you have to start from scratch. Sometimes it's impossible to recapture a moment of inspiration that lead to some of your trading breakthroughs.
That's one of the biggest reasons to keep a journal.
But when your data is scattered across multiple Excel spreadsheets on your laptop, they can be easy to misplace or accidently delete.
How many times have you started a new spreadsheet for a new backtesting project, or a new trading year…only to forget where it went a month later?
I've been guilty of that a few times.
Downloadable trading journal programs are great at organizing all of your trading data in one place, but they also create a single point of failure.
This is especially true if you use Windows. When I used to use Windows, I would have to reload Windows at least once every 2-3 years because of viruses or bugs that should have been fixed in 2004.
I lost everything a couple of times.
In the end, a cloud-based solution is the only way to go. It's accessible on any computer and you need an internet connection to trade anyway…so why not use a cloud-based trading journal?
Multiple of Risk Calculation
It blows my mind how many trading journals lack this metric.
On top of that, they don't give you any advanced risk-based metrics that can help you improve your trading.
Tracking risk multiples can help you improve your profit targets, identify bad habits and optimize your stop losses. It should be included in every trading journal.
MFE and MAE Metrics That are Actually Useful
Yes, there are journals out there that give you MFE and MAE metrics.
But most of them give you these metrics in pips or percentage. This type of reporting can be useful with some trading styles, but overall, it's not the best way to track MFE and MAE.
If you had a 15 pip stop loss on one trade and a 150 pip stop on another trade, then an average MFE of 100 pips doesn't really mean much because your risk was very different on both trades.
However, if you measure these metrics in terms of risk multiple, then you have actionable data that can be used to improve your trading.
Trading Strategy Tracking
A lot of journals that I tested don't give you in-depth analysis by trading strategy.
I've always found this odd.
It's like trying to become a better 3-point shooter in basketball, but not tracking your 3-point shot percentage.
Other journals have this capability, but it's not easy to use. I wanted to be able to see all of my performance results as soon as I opened my journal.
Screenshot Comparison
I've come across many successful traders that attribute a lot of their success to doing before and after screenshots.
It makes sense, especially if you trade technical trading strategies.
But I wasn't able to find a journal that made this easy. I actually found it easier to paste my screenshots in a Pages document, instead of using the journals out there.
Simple
Most trading journals are way too complex.
I suspect that many of them are created by developers who don't trade.
A trading journal needs to fit in with my trading workflow…not smoother it.
What I Was Using
The solution that worked best for me for awhile was Evernote with MyFxBook.
It was far from perfect, but Evernote allowed me to see before/after screenshots and track metrics that MyFxBook did not have.
All of my journal entries were backed up in the cloud and I could access them from all of my devices.
Obviously, the biggest downside was that I had to log into two platforms to see all of my data and there were some automated calculations that I simply couldn't do in Evernote.
That worked OK for some time, but I found that I was still missing some valuable data. It would be difficult to calculate and record it for every journal entry in Evernote, and I could not compile the data to give me averages.
I finally came to the conclusion that I needed to create my own trading journal solution.
My Favorite Trading Journal
The solution we created has all of the features mentioned above.
Let's dig into how we have implemented them to make them powerful, actionable and easy to use.
Cloud-Based Trading Journal
We call our trading journal RazorJournal and it is 100% browser based.
So you can run it on Windows, macOS, Linux and any other operating system that has a modern browser.
Everything is backed up in the cloud and you don't have to worry about hard drive crashes or power surges wiping out your trading journal.
You also don't have to go through the trouble of downloading a separate app for each device.
Who does that anymore?
Multiple of Risk Calculation
The multiple of risk calculation in RazorJournal is measured in the industry standard R. So if you risked 100 pips on a trade and you made 100 pips, your result is +1R.
Using this metric also opens the door to optimize your stop losses, take profits and more.
MFE and MAE Metrics That are Actually Useful
These two metrics benefit from using R to track trading results. We call this MFER (Maximum Favorable Excursion in R) and MAER (Maximum Adverse Excursion in R).
Measuring your MFE and MAE in pips doesn't help because price volatility may require you to set your stop loss tight on some trades and further away on other trades.
So an average MFE of 20 pips is meaningless because your stop loss is never the same on every trade. This can lead to false assumptions and wasted time.
When you measure excursion in R, you get a better idea of price movement relative to your entry and stop loss levels.
One useful application of this metric is to see how far trades go against you during winning trades.
This can help you understand if you can potentially set your stop loss a little closer and get more out of every trade.
How Much Profit are You Leaving on the Table?
We use our proprietary MaxR metric to show you how much money you left on the table on each trade, for all of your trading strategies. This shows you if there is potential to let your winners run longer or possibly trade a second position with a bigger profit target.
Find Small Tweaks That Can Lead to Huge Improvements
RazorJournal breaks down your trading results by:
- Entry time of day
- Entry day of week
- Currency pair
Adjusting your trading based on these results can dramatically improve your results. Maybe you should stop trading a certain pair, or avoid trading on certain days of the week.
Trading Strategy Tracking
As soon as you login to RazorJournal, your dashboard will show you a breakdown of your results by trading accounts and trading strategies by account.
Winning!
Screenshot Comparison
Our proprietary Flash Cards module shows the before and after screenshots from all of your trades. We also add key metrics like MAER and results in R, that can help you understand what happened during and after the trade.
This module also allows you to filter your trades by account, trading strategy and/or result (win/loss/breakeven).
When you view all of your losing trades at the same time, you might start to see negative patterns, which you can work on correcting.
Conversely, you can view all of your winning trades to practice what an A+ setup looks like.
You can even embed video playback of your trades, so you can rehearse winning trades, engraining profitable patterns into your mind.
This is like a basketball player practicing free throws…it's all about repetition.
Simple
Last, but certainly not least, RazorJournal is easy to use.
We reviewed every single element of a trading journal and asked if each one was absolutely necessary.
For example, a big one was account balance. Almost all commercial trading journals we've seen track your account balance.
But is it really necessary to track your account balance?
We say no.
Tracking your account balance basically locks your journal to one brokerage account.
If you want to open a new account or move your account to another broker, you usually have to create a brand new journal and you can lose your historical data, or you have to flip back and forth between the two.
However, if you remove account balance tracking, you can track the performance of your trades and trading strategies across any number of accounts.
This makes things much simpler and gives you a much bigger data set to find optimizations.
…and that's just one example of how RazorJournal simplifies the process of journaling.
Conclusion
After years of making do with mediocre trading journal solutions, I'm very happy that I finally have a trading journal that gives me the data I've been looking for.
But this is just the beginning.
There are so many more features that we want to add in the future.
If you have been looking for a journal like this, then I invite you to take the RazorJournal tour here.
