Record everything in percentagesPut the plan and the result side by side.
In your journal, risk and reward go in as percentages, not dollars. Put the planned reward right next to what you actually made, and the gaps between the 2 tell you what to fix.
Risk goes in as a percentage
After the direction and the target, the journal records the numbers of each trade, and the unit matters. The risk column shows how much of your account you put on the line. Say your account is $10,000 and you risk $100 on a trade: that is 1%, so you enter 1%. If you risked 0.5% or 2%, you enter that.
Percentages keep your risk visible, trade after trade. $100 means something very different on a $5,000 account than on a $50,000 one, and your own account changes size as you trade. 1% means the same every time, so you can see at a glance whether your risk is steady or creeping up.
Plan next to result
Next comes the planned reward: how much you aimed to make, again in percent. If your take profit was set at 3%, you write 3%. Always percentages, never dollar or euro amounts.
Right next to it sits your gain, what you actually made on the trade in percent. The placement is on purpose: put planned and actual side by side, and patterns jump out. Planned 3%, made 1%, again and again? Either you are closing trades too early, or your targets aren’t getting hit because they sit in the wrong place.
| Trade | Risk | Planned | Gain | Note |
|---|---|---|---|---|
| #31 | 1% | 3% | 1% | Closed early |
| #32 | 1% | 3% | −1% | Stopped out |
| #33 | 1% | 3% | 1.2% | Closed early |
| #34 | 1% | 2% | 2% | Target hit |
| #35 | 1% | 3% | 0.8% | Closed early |
The money columns still matter
The dollar columns stay. Profit and loss shows the actual dollar amount you made or lost on the trade. Equity is your total account value after the trade: what you started with, plus profits, minus losses. And pips record the move itself: up 100, you enter 100, down 50, you enter −50.
The percentages tell you how a trade compares with your others. The dollars and pips tell you what it did to your account and how far the market moved.
| Column | You write | Why |
|---|---|---|
| Risk | 1% | $100 on a $10,000 account |
| Planned reward | 3% | Where your take profit sat |
| Gain | 1% | Next to the plan, so the gap shows |
| Profit and loss | +$100 | The actual dollars made or lost |
| Equity | $10,100 | Account value after the trade |
| Pips | 100 | The move itself, up or down |
Slice your results
Then come the columns that let you slice your results. The quarter, Q1 to Q4, and the year show how you are growing over time and let you compare one period with the next.
Trade style is often the most revealing. Mark every trade as scalping, day trading or swing trading. If your scalps keep underperforming, you either drop them or fix what is wrong with them.
In the journal
Write the risk and the planned reward in percent. If you can’t, the trade has no clear stop or target yet.
Write the gain in percent next to the plan, and add a word on any gap: closed early, stopped out or target hit.
Mistakes to avoid
- Recording risk only in dollars. As the account grows or shrinks, the same dollar amount means a different risk, and the drift goes unnoticed.
- Leaving the planned reward empty. Without it, the gain has nothing to be measured against.
- Mixing up equity and profit and loss. Equity is the whole account after the trade, profit and loss is the trade alone.
In short
- Write risk and planned reward as a percentage of the account: $100 at risk on $10,000 is 1%, and a take profit set at 3% is a planned reward of 3%.
- Put the actual gain right next to the planned reward: planned 3%, made 1%, again and again, means you close too early or your targets sit in the wrong place.
- Keep profit and loss, equity and pips as well, and slice your results by quarter, year and style to see which trades to fix or drop.
Key terms
- Take-profit
- An order that closes your trade at a set price to lock in the gain.
- Pip
- The smallest standard price step in a currency pair. For most pairs it is the fourth decimal (0.0001), for yen pairs the second (0.01).
- Trading styles
- How long you hold trades: scalping (minutes), day trading (hours), swing trading (days) and position trading (weeks or longer).
- Risk to reward
- How much you can win compared with how much you risk. At 1:2 you aim to make 2 for every 1 you risk.