Keeping a Journal
Memory reconstructs past decisions to fit what happened afterwards. A contemporaneous record is the only defence, and it is the only route to knowing what a method actually does.
MadStockAlerts Research · Updated August 28, 2026
What to take away
- Memory is reconstructive and systematically favourable to the rememberer.
- Recording the reasoning matters far more than recording the outcome.
- The broker statement holds the results; only a journal holds the reasons.
- Review is where a journal produces anything; a journal never read is a diary.
- Splitting plan-following trades from exceptions is the most informative cut.
MAD Academy Training Video · 0:46
Memory Is Not Evidence
You will remember your trading inaccurately and in a flattering direction, which makes a written record the only real feedback loop.
This lesson is part of a Stock Alerts + Tools plan.
Why memory is not enough
Hindsight bias reliably alters recollection of what was expected before an outcome was known. After a loss, the warning signs are remembered as having been obvious. After a gain, the reasoning is remembered as clearer than it was.
This is not a matter of honesty. It is how recall works, and it operates on everyone. A contemporaneous written record is the only thing that survives it.
Scroll the chart sideways to see all of it.
- Remembered
- In the journal
What to record
- The thesis in one or two sentences, written before entry.
- What would falsify it, stated specifically.
- Entry, stop and size, and how the size was derived.
- Whether the setup met the written plan, or was an exception.
- The state of mind at entry, which is the field most often skipped and most often revealing.
- The exit and whether it was the planned one.
The outcome is the least important field. It is already on the statement, and it is the field most likely to distort the review of everything else, because a profitable trade invites less scrutiny than it deserves.
Reviewing it
- 1Separate plan from exceptionCompare the results of trades that met the plan against those that did not.
- 2Group by setupExpectancy by setup type shows which parts of a method carry it and which drag.
- 3Check execution against intentionThe gap between the plan and what was done is usually where the losses concentrate.
- 4Look for state-of-mind patternsIf the worst trades cluster after a loss, the problem is not the method.
The first cut is usually the most confronting and the most useful. A method that is profitable on the trades that followed it and unprofitable overall has an execution problem rather than a design problem, and those require completely different responses.
The one that is never read
A journal produces nothing until it is reviewed. Most journals are kept diligently for a few weeks, never reread, and abandoned.
A short entry per trade that is actually reviewed monthly is worth far more than a detailed one that is not, which argues for making each entry small enough that keeping it is not a decision.
Recording the decision, not the outcome
A record of what was bought, at what price, and what happened is a statement, and a broker already produces it. What a broker cannot produce is the reason, and the reason is the only field that makes review possible, because it is the only one that can be tested.
The critical property is that the reason has to be written before the outcome is known. Written afterwards it is reconstructed, and reconstruction is systematically favourable: the reasoning that is remembered is the reasoning that fits what happened. A note written at the time is the only version that has not been edited by the result.
| Field | Why it earns a column |
|---|---|
| The reason, in one sentence | The only thing that can turn out to have been right or wrong |
| What would make it wrong | Written in advance, this is a test. Written after, it is a description |
| Size, and how it was arrived at | Almost always the largest determinant of the result |
| What was felt at entry | Boredom, urgency and certainty are all predictive of something, and none of them are remembered |
| Whether the rules were followed | Separate from whether it worked, and the more useful of the two |
Reviewing it in a way that finds anything
A journal that is written and never read is a diary. What makes it a tool is aggregation: the useful findings are not visible in any single entry and appear only when many entries are grouped and counted.
- Group by setup and count. A setup that has been taken thirty times has a record; one taken three times has an anecdote.
- Group by whether the rules were followed. If the followed trades and the unfollowed ones perform the same, the rules are not doing anything and should be changed or dropped.
- Group by time of day and by day of week. Concentrations here are usually about attention and schedule rather than about the market.
- Group by size. If the largest positions are systematically the worst ones, size is being set by conviction rather than by risk, and conviction is exactly what runs highest at the top of a move.
Reviewing on a fixed schedule rather than after a bad run is what makes the exercise honest. A review triggered by a loss is a search for the cause of that loss, and it will find one whether or not there is a pattern behind it.