Why is it this important?
Well there are several reasons why. The first and most obvious one is that you can instantly tell which investments were successful and which ones were not so profitable. This information is invaluable because you will learn where you are going right and where you are going wrong.
A lot of share investors have no clear strategy when buying and selling shares, which is madness, particularly in today's markets where they are as challenging as they've ever been. Making money from investing generally involves having a solid strategy or system in place. So by implementing a system and recording your trades, you can instantly see from your records where the system is failing so you can take steps to improve it.
Bad trading decisions should be ironed out completely. You need to learn from your mistakes and eliminate these dodgy investments completely. It's perfectly normal to buy shares almost on impulse when they look oversold, but these impulsive trades can prove costly. If you look at your trading history you will soon spot these trades and you should hopefully learn to eliminate them from your trading.
Another purpose of keeping full trading records is that it allows you to determine how well your timing is with regards to buying and selling. For example by viewing the prices you bought and sold shares at, you will instantly learn if you bought or sold too soon or whether you allowed losses to accumulate too much rather than sticking to a tight stop loss, for instance.
In my opinion a trading diary is a must for anyone who is serious about making consistent profits from share trading. If you have written records of each trade, you should find that you can instantly see where you are going wrong if you are not making money or not making as much as you would like.
There is no excuse nowadays either because pretty much all broker accounts now have full records of every share transaction you make. Therefore even if you don't want to write down your trades yourself, you can always log in to your account to view your trades.
If you don't learn from your mistakes you are unlikely to ever become a truly successful investor. Making money from investing requires a decent system or strategy combined with good levels of discipline, and a trading diary will certainly help you with achieve both of these things.
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Tags: investing, finance, stocks, stock market, shares, stock market investing, share trading, share dealing records