Trade Journaling and Post-Mortem Reviews

Why Most Traders Repeat the Same Mistakes

Trading without a journal is practicing without feedback. Studies of professional traders show that those who maintain detailed journals improve their risk-adjusted returns by 15-25% over three years compared to non-journaling peers. Yet fewer than 20% of retail traders keep any systematic record of their decisions.

The point is: memory is unreliable, especially for losses. You remember the wins that confirmed your skill and forget (or rationalize) the losses that exposed your weaknesses. A trade journal creates an honest record that your future self can learn from—the same way athletes review game film.

Minimum Fields to Track (The Non-Negotiable Data)

Every trade entry requires these 8 essential fields:

1. Date and time: Both entry and exit (timestamps matter for pattern recognition)

2. Symbol and position size: Shares or contracts, dollar value, and percentage of portfolio

3. Entry price and exit price: Actual execution prices (not intended prices)

4. Direction: Long or short

5. Setup type: What pattern or signal triggered the trade? (Earnings play, technical breakout, value thesis, momentum, etc.)

6. Pre-trade thesis: 1-2 sentences explaining why you expect the trade to work. Written before entry.

7. Planned stop and target: Where would you exit for a loss? For a profit? Written before entry.

8. Actual P&L: In dollars and as a percentage. Include commissions and slippage.

Why these fields matter: Without thesis and planned levels documented upfront, your post-mortem becomes fiction. You'll construct narratives that make past decisions seem more rational than they were.

Enhanced Fields (For Serious Improvement)

Beyond the minimum, these fields accelerate learning:

Emotional state at entry: Rate 1-5. Were you calm, anxious, euphoric, revenge-trading, or bored?

Market context: What was the S&P 500 doing? VIX level? Sector performance?

Execution quality: Did you get the price you wanted? Slippage in dollars.

Time in trade: How long from entry to exit?

Exit reason: Stopped out, target hit, thesis changed, or emotional decision?

Grade (A/B/C/D/F): Based on process, not outcome. An "A" trade can lose money if you followed your system perfectly.

Lessons: What did this trade teach you? (Fill this out during post-mortem, not immediately after.)

A useful structure: Entry data → Market context → Execution → Exit → Outcome → Process grade → Lessons

Review Frequency (When to Analyze)

Different review cadences serve different purposes:

Daily review (5-10 minutes):

• Did I follow my rules today?
• Any trades I regret for process reasons (not outcome)?
• Emotional state throughout the day?

Weekly review (30-45 minutes):

• Win rate for the week
• Average winner vs. average loser
• Best and worst trade (by process, not P&L)
• Patterns in setup types: which are working?

Monthly review (1-2 hours):

• Cumulative P&L by setup type
• Expectancy calculation for each strategy
• Time-of-day patterns in performance
• Emotional state correlation with outcomes

Quarterly review (half day):

• Are any strategies consistently negative expectancy?
• How has position sizing affected results?
• What mistakes recur despite awareness?
• Rule changes needed?

The durable lesson: Daily reviews prevent immediate repetition of errors. Monthly reviews reveal systemic issues. Most traders skip both and wonder why they plateau.

Metrics to Calculate (Quantifying Your Edge)

Raw P&L doesn't tell you if you're improving. These metrics do:

Win rate:

• Formula: Winning trades / Total trades
• Benchmark: Varies by style; trend-followers may win only 35-40%; mean-reversion traders need 55-65%

Average win / Average loss (Reward-to-Risk):

• Formula: Σ(winning trade P&L) / Number of winners ÷ Σ(losing trade P&L) / Number of losers
• Benchmark: Minimum 1.5:1 for trend strategies; can be lower for high win-rate strategies

Expectancy:

• Formula: (Win rate × Average win) – (Loss rate × Average loss)
• Example: (0.45 × $800) – (0.55 × $400) = $360 – $220 = $140 per trade
• This is your edge. Positive expectancy means you have one; negative means you're losing money systematically.

Profit factor:

• Formula: Gross profits / Gross losses
• Benchmark: Above 1.5 is acceptable; above 2.0 is strong

Maximum drawdown:

• Largest peak-to-trough decline in your equity curve
• Compare to your risk tolerance: can you psychologically survive your worst historical drawdown?

Sharpe ratio (annualized):

• Formula: (Average return – Risk-free rate) / Standard deviation of returns
• Benchmark: Above 1.0 is acceptable; above 2.0 is excellent

The Post-Mortem Process (Learning from Individual Trades)

After every trade (or at minimum, weekly for all trades), conduct this analysis:

Step 1: Outcome classification

Step 2: For losses, answer these questions:

• Was the thesis valid at entry? (If not: thesis development problem)
• Did you follow your stop? (If not: discipline problem)
• Was position size appropriate? (If not: risk management problem)
• Would you take this trade again? (If yes: accept variance; if no: what would you change?)

Step 3: For winners, resist confirmation bias:

• Did you exit according to plan, or early due to fear?
• Was the win larger than your target allowed? (Position management opportunity)
• Was the thesis confirmed, or did you get lucky on a different catalyst?

The practical point: Winners feel like skill; losers feel like bad luck. The journal reveals the truth.

Pattern Recognition (Finding Your Leaks)

After 50-100 trades, your journal reveals patterns:

Time-of-day leaks:

• Are losses concentrated in the first 30 minutes? (Overtrading the open)
• Do you give back morning gains in the afternoon? (Fatigue, boredom trades)

Setup-specific leaks:

• One setup type may have negative expectancy while others are positive
• Kill the losers; scale the winners

Emotional leaks:

• Trades after losses: Is your win rate lower? (Revenge trading)
• Trades after wins: Do you size up too aggressively? (Overconfidence)

Market condition leaks:

• Do you perform worse in high-VIX environments? (Need to reduce size)
• Do trending markets expose your mean-reversion bias? (Strategy mismatch)

Example discovery: A trader's journal showed win rate of 62% on planned trades versus 34% on "opportunity" trades taken without pre-market planning. Solution: no trades without pre-market thesis documentation.

Tools and Formats

Spreadsheet (minimum viable):

• Excel or Google Sheets with the 8+ essential fields
• Create calculated columns for win rate, expectancy, profit factor
• Monthly pivot tables by setup type

Dedicated platforms:

• Tradervue, Edgewonk, TraderSync (ranging from free to $30/month)
• Automatic import from brokers
• Built-in analytics and pattern detection

Physical notebook:

• Works for discretionary traders who find writing therapeutic
• Lacks calculation ability; requires manual transfer for analysis

The test: Can you answer these questions from your journal within 5 minutes?

1. What's your expectancy on each setup type?
2. What's your win rate on trades taken in the first 30 minutes?
3. What's your average P&L on trades after a losing day?

If you can't answer these, your journal isn't functional.

Detection Signals (When Your Process Is Failing)

You're likely skipping effective journaling if:

• You can't remember the thesis for trades from last week
• Your estimated win rate differs from actual by more than 10 percentage points
• You keep making the same mistake and are "surprised" each time
• Your position sizes are inconsistent with no documented reason
• You feel like trading is gambling rather than a probabilistic exercise

Mitigation Checklist

Essential (high ROI)

These 4 items capture 80% of the journaling benefit:

• Record the 8 minimum fields for every trade (within 24 hours of exit)
• Conduct 10-minute weekly reviews calculating win rate and average winner/loser
• Calculate expectancy monthly by setup type—kill negative expectancy strategies
• Grade trades on process (A-F), not outcome

High-Impact (systematic approach)

For traders committed to improvement:

• Track emotional state at entry (1-5 scale) and correlate with outcomes
• Analyze time-of-day patterns quarterly to identify concentration of losses
• Review trades after losses separately—measure win rate on revenge trades

Optional (for serious traders)

If trading is a significant income source:

• Use dedicated journaling software with broker integration
• Conduct quarterly strategy reviews with formal expectancy calculations
• Share journals with a trading mentor or accountability partner for external pattern recognition

Next Step (put this into practice)

Start your trade journal today with the next trade you take.

How to do it:

1. Create a spreadsheet with the 8 minimum fields
2. Before your next trade, fill in: symbol, thesis, planned stop, planned target
3. After exit, complete: actual prices, P&L, exit reason, process grade

Interpretation:

• If you struggle to write the thesis: the trade is underdeveloped
• If you can't define stop and target: position sizing is arbitrary
• If grading process feels uncomfortable: you're relying on outcome luck

Action: After 10 trades, calculate your expectancy. If negative, you have a strategy problem. If positive but you're still losing money, you have a discipline problem. The journal tells you which one.