Today we will tell you how to increase the efficiency of your binary options trading by maintaining and analyzing a trading diary. Many novice binary options traders refuse to record their transactions, and this is in vain, because such data helps to work on mistakes, train discipline and advance in understanding the market much faster than others.
Analyzing your own transactions and working on yourself are not unique methods in their effect and meaning. Thus, many students in a variety of fields are able to achieve great heights by dedicating additional time to learning and self-development. Forbes magazine published an article in 2009, “The 10,000 Hour Rule,” in which the author, through research, tried to answer the question “Is there a relationship between talent and the amount of effort expended on learning and gaining experience?”
This study assessed the achievements of violinists and pianists who began playing music at the same age. Upon reaching 20 years of age, some of them achieved impressive success, while others did not become professionals at all. An interesting fact is that among the most successful musicians from this selection, not a single one was found who would devote less time to studying and training than his less successful colleagues. The experience of the best musicians included more than 10,000 hours of practice.
A similar relationship between effort and achievement can be seen in other areas. For example, Bill Gates, while studying at school, tried to do programming even on weekends, and the Beatles group, at a time when they had not yet gained worldwide popularity, organized daily concerts in bars lasting up to 8 hours.
So is it worth it for newcomers to the world of online trading to spend so much time searching for illusory win-win strategies ? Or maybe it’s better to spend this time studying not new, but reliable methods?
In fact, all a trader needs to succeed is experience in graphical analysis . And in order to achieve truly stable and profitable trading, you need to constantly analyze your work and eliminate mistakes that were made earlier. Keeping a diary for these purposes is extremely effective. Moreover, such a diary will help you better control yourself and cope with emotions and psychological problems.
Of course, it looks like a pretty boring task, but who said that you can’t try a little to achieve success?
Making a trading diary
It is not difficult to find examples of trading diaries on the Internet. We will present you with our version.
As you can see in the screenshot, the diary page is a table divided into specific categories:
- Assets. Here we indicate the ticker of the financial instrument in which we opened a position. It is worth noting that such statistics can help identify instruments that are more profitable for the strategy, because the results for them will be presented very clearly.
- Call/Put – direction of the selected option.
- Rate – the amount of investment in a specific transaction. After analyzing transactions in this category, it is convenient to adjust risk and capital management strategies.
- Time. This column indicates the time of purchase, as well as the expiration of the option . Finding the optimal expiration date for binary options is also very important and assessing this category makes the task a lot easier.
- The result is the amount of profit or loss received. In fact, an assessment of the financial result over a long period will indicate the overall effectiveness of the strategy used.
- Conditions. This group of categories describes the conditions for opening a position. Since any trading system is a set of certain rules, using such records you can not only track whether all the conditions of the strategy are met, but also draw conclusions about its performance. In addition, a trader can add his own or exclude existing rules of the system, and using the obtained statistics, evaluate the final changes in trading results. Some traders supplement their notes with screenshots from the trading terminal (for example, MetaTrader 4 ).
The following diary is just an example of one entry format. Each trader can choose the format that will be most convenient for him personally. Records can be kept not only on a computer, but also on paper, and you can also add additional information to them, such as screenshots and income graphs.
Remember that by taking the time to journal now, you can quickly learn how to trade binary options profitably.
The convenience and clarity of recorded transactions will help you draw accurate conclusions about your work. It is unlikely that you can mentally, without any notes, reproduce all the transactions that were made several months ago.
Such statistics will help you get a complete picture of the effectiveness of your trading strategy, as well as the level of execution that you are able to provide. And by detecting and correcting your mistakes in time, you quickly improve your trading level.
Remember the 10,000 hour rule! Hone your skills and discipline! Learn and analyze work effectively to achieve better results!
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