Successful traders have strategies and systems in place to consistently make profitable trades, but they also have something else that is often overlooked – a trading journal. A trading journal is a record-keeping tool used by traders to track and analyze their trades. It may seem like an unnecessary task at first, but keeping a detailed journal can greatly benefit your trading performance in the long run. In this article, we will discuss the importance of keeping an options trading journal and share an Excel template to help you track your operations.
Key takeaways
- An options trading journal is an essential tool for tracking and analyzing trades, as it lets you understand what you’re doing right and what is wrong with your strategies and keeps you accountable.
- A good trading journal not only focuses on profits and losses but also on the reasoning behind the trades and emotions involved.
- Keeping an options trading journal allows you to identify patterns in your trading behavior and make adjustments accordingly for more successful trades in the future.
What is a Trading Journal (and Why Do You Need One?)
From a pen and paper to a complex spreadsheet, pretty much everything can be used as a trading journal. A trading journal tracks each transaction, including entry and exit points, reasons for trading, and emotions involved.
Using a trading journal template or trading journal Excel file helps you evaluate performance, refine strategies, and identify trading patterns. A thorough trade log lets you see what works and adjust your methods for better outcomes. We have created our own Excel template, which you can download at the end of this article and use as your options trading journal. How do you use it? That’s a question we answer below.
Keeping Track of Your Trades with Option Samurai
Other than the Excel template that you’ll find at the bottom of this article, our trading platform offers a comprehensive and intuitive options trading journal to track your trades with ease. By using Option Samurai’s trade journal, you can quickly record and analyze your trading performance, allowing for better decision-making in the future.
In fact, here is a quick snapshot of how your options trading journal will look like:
With our analytics tools, you can quickly identify trends and patterns in your trades, helping you make data-driven decisions. Plus, our grouping feature allows for easy categorization of trades based on different factors such as expiration date or strategy type.
The rest of the article will elaborate on our Excel template as an intuitive way to keep an offline options trading journal. Note that this file is free, but if you want something more advanced and automated, our trading journal feature on Option Samurai is definitely what you’re looking for.
Learn to Use Our Options Trading Journal
There are three concepts you need to grasp before you can use our Excel options trading journal:
- Start by inputting your trades in the “Trades” tab.
- Take a look at how your strategies are performing in the “Overview” tab.
- Repeat the process over and over.
And, of course, make sure you read the instructions tab first in our options trading journal:
The subsections below will explain these concepts in more detail, so that you can better understand how our trade log works.
Add All Your Trades
Start by inputting each trade in the “Trades” tab of your options trading journal. This step is crucial for keeping accurate records. Here’s how:
Steps to Record Each Trade
- Identify Your Trade: Open the “Trades” tab and fill in the information in the blue columns. This includes details like the trade date, asset symbol, action (buy/sell), type (call/put), strike price, expiration date, entry price, and exit price.
- Multi-Leg Trades: If you’re recording a multi-leg trade (e.g., a long straddle), use one row per leg. For example, input the call you bought on one row and the put you bought on another, each with its own profit/loss.
- Automated Calculations: The other columns in the “Trades” tab are automatically calculated using formulas or our add-in, so you don’t need to manually input all data.
Here is an image that will show you where to retrieve the information you need from Option Samurai’s option screener (we numbered each piece of information that you should add to the journal, the first image is the screener result, while the second one is the Excel file):
Importance of Detailing Entry and Exit Points
Recording the entry and exit points of each trade in your options trading journal helps you see exactly where you made or lost money. This level of detail allows you to:
- Track Performance: Understand which trades were winners or losers.
- Analyze Timing: See if the timing of your trades affects your overall performance.
Documenting Reasons for Each Trade and Initial Expectations
Write down why you entered each trade and what you hoped to achieve. This can include:
- Market Conditions: Note any significant news or trends that influenced your decision.
- Strategy Used: Specify which strategy you were employing and why.
- Emotional State: Document your emotions during the trade to better understand how your psychology affects your decisions.
Check Out Your Trading Overview
After recording your trades, head to the “Overview” tab to analyze your trading performance:
How to Analyze the Compiled Data
Right-click on the pivot tables in the “Overview” tab of the options trading journal and select “Update” to refresh the data. This tab provides insights into your overall performance, displaying your trades’ outcomes in a clear and organized manner.
Utilizing Charts and Graphs for Visual Representation
Visual aids are essential for understanding your trading performance at a glance. Here’s how to interpret the key sections:
- Gray Box Tables: Table A shows the total number of trades divided between closed and open trades. Table B highlights your profitability, including realized P&L (closed operations), unrealized P&L (current P&L of open operations), and the percentage of profitable trades (only considering closed ones).
- Charts: “My Portfolio” displays the composition of your portfolio based on open trades, while “My Monthly P&L” shows the realized P&L month by month.
- Pivot Tables Below Gray Box: These tables in the options trading journal provide detailed breakdowns:
- Strategy P&L breakdown helps you identify which strategies are most profitable.
- Detailed numbers of your portfolio and realized P&L offer a deeper look into your trading data.
Identifying Patterns and Trends
Regularly reviewing these insights can help you spot trends and patterns. For example:
- Strategy Effectiveness: Determine if certain strategies consistently yield better results.
- Market Conditions Impact: Assess how external factors influence your trades.
- Performance Over Time: Track improvement or decline in performance over specific periods.
Whenever you add a trade to the “Trades” tab, remember to right-click on any of the three pivot tables and select “update” to refresh the overview data.
Update the Journal Regularly
Keeping your options trading journal updated regularly is vital for accuracy and meaningful insights:
- Importance of Consistent Updates for Accuracy: Frequent updates ensure that all data is current, allowing for more precise analysis and adjustments.
- Setting Reminders and Routines for Journal Maintenance: Set reminders or establish a routine to update your journal daily or weekly. Consistency prevents data from becoming outdated or incomplete.
- Reflecting on Past Trades and Adjusting Strategies Accordingly: Regularly review past trades to identify mistakes and successes. Use this reflection to fine-tune your strategies and improve future performance while using our trading journal Excel file.
