Lesson 13 Psychology and Journaling

Recognise common decision errors, record process quality, and use practical rules to interrupt impulsive behaviour.

Separate decision quality from outcome

A trade that follows a sensible predefined process can lose. A trade that breaks every rule can win. Judging only the outcome rewards luck and makes the process difficult to improve. Review what was known when the decision was made, the action taken, and whether it followed the written rules. Common problems include chasing a move after it has happened, increasing size to recover a loss, refusing to accept invalidation, taking more trades after a lucky win, and seeking only information that supports an existing position. These are observable behaviours; label the action rather than calling yourself a “bad trader.”

Replace a vague intention with a concrete action

Trigger: A valid stop is hit; Unhelpful response: Enter again immediately to recover; Course practice response: Save the trade, complete the review, and wait for a new qualifying signal
Trigger: Price runs without an entry; Unhelpful response: Chase at an unplanned price; Course practice response: Mark it as missed and preserve the original rules
Trigger: Two trades win; Unhelpful response: Increase size because confidence rose; Course practice response: Recalculate from current equity using the same risk fraction
Trigger: Sleep is poor or attention is divided; Unhelpful response: Trade while distracted; Course practice response: Observe only or skip the session
Trigger: A loss threshold or rule breach occurs; Unhelpful response: Hide it and continue; Course practice response: Cancel pending demo entries, manage the exit under the plan, and review before returning

For this course, pause for at least 10 minutes after a closed losing trade and finish the journal entry before another entry. The strategy’s next signal and all limits must still qualify. The pause is a teaching routine, not a claim that a fixed duration controls emotion for everyone.

Keep a useful journal

Before entry, save the signal, strategy version, chart, decision time, news check, planned prices, units, costs, margin, and initial cash risk. Record your reason for trading or skipping. Use a simple readiness note such as “rested and attentive” or “distracted; observation only.” After exit, record actual fills, separate charges, net result, realised R, maximum equity drawdown during the session if available, and whether each rule was followed. Attach before and after screenshots when the platform supports them. Describe one improvement in behaviour rather than promising a better financial outcome. Example: “The stop was hit. I checked the fill and accepted the loss. My position size and news filter were correct. I felt an urge to enter again but waited and recorded no valid second signal.” This is a useful process record even though the trade lost.

Practice

Write a review for one winning and one losing simulated or paper trade. For each, assess direction, entry rule, size, protective order, exit, and record keeping separately from the result. Identify one trigger that could lead you to break a rule and write your planned response.

Check your understanding

After the four lessons in this module, complete Module 4 knowledge check from the course overview. It contains the three questions from each lesson with feedback after submission. Keep written calculations in your workbook.

Glossary

Drawdown: Decline from an equity peak to a subsequent lower value
Equity: Account value including open profit or loss and applicable adjustments
Margin: Collateral required to support a position
R: A result measured relative to the initial planned cash risk