InvestorQ : I have heard a lot of the trading book and the trading diary for intraday traders. What exactly are these?
Bhavika Nehru made post

I have heard a lot of the trading book and the trading diary for intraday traders. What exactly are these?

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Bhavika Nehru answered.
3 years ago
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Two of the best ways to build your own guide for intraday trading is to gradually build up your trading book and your trading diary. You start off with a rough draft and gradually build it over time. Here is how:

The trading book is almost like your constitution for trading. It actually guides your trading and helps you define the maximum loss levels, the risk reward ratio, the trade-offs, factors to consider, protecting losses etc. When any trigger is not in consonance with the trading book, always go by the trading book. That is your underlying constitution. Always consult your trading diary when in doubt and if your view goes contrary to the trading book then go by the trading book.

The trading diary is more of an analytical recording and evaluation of your trades. While the recordings are done during the trade, the evaluation has to be necessarily done every day evening. The trading diary not only records the positions and the logic, but also does an EOD evaluation of where you went right and where you went wrong. Of course, you need to be very honest and transparent only then it will be useful. The beauty of the trading diary is that the key learnings become a part of you trading book.

Finally, if you want your trading book and your trading diary to genuinely serve your purpose, then you need to be totally honest and transparent while writing it. The more honest you are about the mistakes you made in intraday trading, the better your learnings will be and the better will be your opportunities to learn from these mistakes and take corrective action in future.

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