How to Keep a Trading Journal: The Pilot and Surgeon Method

Since 1976, pilots, air traffic controllers and mechanics in the United States have been able to send NASA a written account of something that went wrong, or nearly did. The report is read, stripped of names, and filed alongside thousands of others so the same mistake can be spotted before it happens again. It sounds a long way from a trading desk. But if you are working out how to keep a trading journal, it's one of the most useful models there is: write down what happened, soon, honestly and in the same format every time.

This article is about record keeping. It does not tell you what to trade or how, and it is not investment advice.

The short answer: write a plan row before every trade (setup, entry, stop, target, size, the amount at risk and why) and a result row after it (exit, fees, the result in R, whether you kept your rules, how you felt and any mistake code). Review once a week for about fifteen minutes, and every four weeks draw your equity curve by hand.

The pilots' notebook: why aviation writes up its near misses

The program is NASA's Aviation Safety Reporting System, or ASRS. It began in 1976, and NASA runs it partly because NASA has no power to punish anyone. The idea is that people report more openly to someone who can't fine them.

Anyone involved in flying can file: pilots, controllers, cabin crew, dispatchers, maintenance technicians. The reports are voluntary. Once the staff have what they need, the report is stripped of identifying details and given a number.

Much of what gets written up isn't a crash. It's a wrong turn on a taxiway or a misheard instruction. The flight landed and nobody was hurt, and it gets written down anyway, because the near miss is where the pattern shows first. Analysts read the reports side by side, send alerts when something keeps coming up, and publish a monthly safety newsletter, CALLBACK.

The principle is simple. A mistake you write down can be caught. A mistake you only remember gets retold, a little more kindly each time.

The surgeons' pause: three moments on one page

In operating rooms the written record takes a different shape. The World Health Organization's Surgical Safety Checklist has 19 items spread across three pauses: before anesthesia, before the first incision, and before the patient leaves the operating room. At each pause the whole team stops and confirms things out loud. Who is the patient? Which site? Which procedure? Has everyone said their name and role?

None of it is clever. That is the point. It was tested in eight hospitals in eight cities, from Toronto and New Delhi to Ifakara and Seattle, and published in 2009. What the study found is a medical finding about operating rooms, and we won't stretch it any further than that.

The part worth borrowing is the shape: a short written check before the step you can't undo, and another before everyone walks away.

The turning point: the record is not the memory

Put the two stories together and they make one idea. Both professions stopped trusting memory to tell them what happened.

Memory is a flattering storyteller. It remembers the trade that went to plan and quietly forgets the three you took because you were bored, angry or chasing a move that had already gone. A week later you honestly believe you "mostly followed the rules". A written record doesn't edit itself that way.

So the job of a trading journal is narrow, the same job the pilots' reports and the surgeons' checklist do: when you look back, you know what you did and why.

How to keep a trading journal: plan before, result after

Borrow the surgeons' pauses. Split every trade into two rows.

Before the trade: your sign-in

• Date and time
• Market and instrument
• Long or short
• The setup you are trading, by name
• Entry, stop and target
• Size, and how much you are risking (your 1R)
• One line: why this trade, why now

It is surprisingly hard to take an impulsive trade when you must write down the reason before you click.

After the trade: your sign-out

• Exit price and time
• Fees, because costs are real
• The result in money and in R
• Rules kept: yes or no
• How you felt when you clicked
• A mistake code, if there was one
• One lesson, or one thing you would change

The Trader I'm Becoming puts PLAN above RESULT in each trade entry, with space to write the plan before the trade and record the result afterward.

Market details worth recording

Each market has its own details. For options: strike, expiry, call or put, and lots. For futures: contract, expiry, lots and tick value. For forex: lot size, stop in pips, session and swap. For crypto: spot or perpetual, leverage, liquidation level and funding. Anything you don't write down can't be reviewed.

R-multiple: one ruler for every trade

R is a way of measuring every trade on the same scale. It's a measurement, not a target. Your 1R is the amount you planned to risk. If you planned to risk 1,000 and lost 1,000, the trade was -1R. If you lost 2,000, it was -2R, and your record now shows plainly that the stop was not respected. Writing results in R lets you compare trades of different sizes across different markets, and it shows at a glance whether losses are staying the size you planned.

Emotion tags and mistake codes: your own incident reports

This is the pilots' idea in miniature. Next to each trade, write a one-word tag for how you felt when you entered: calm and in plan, fear of missing out, revenge, rushed, bored, overconfident, fearful, tired.

Then give your common mistakes codes: entered without a written plan, no stop set, moved the stop, size larger than the rule, chased the move, took a setup not in the playbook, traded outside my hours, didn't log the trade the same day. Write the code on any trade where it happened.

Over a few weeks, one tag or one code usually turns up more often than the rest. That is a habit you can now see, in your own handwriting. Make the most frequent code your only project for the next four weeks.

The weekly review: fifteen minutes, five questions

Once a week, sit down and read back:

1. How many trades did you plan, and how many did you take?
2. How many broke a rule?
3. Which emotion tags came up most?
4. Which mistake codes came up?
5. What is the one thing you'll change next week?

The last question matters most. One change a week is manageable. Ten is a wish list.

Every four weeks: draw the picture by hand

Every four weeks, plot an equity curve in R, one dot per trade, joined up. Next to it, shade an R histogram: one square per trade, in its column. Then ask what the shape says about your habits. Are losses bigger than -1R? Do exits come early out of fear? Finally, reconcile the journal with your broker statement. The record should match the account, and a gap usually means trades you didn't log.

A notebook laid out like a checklist

You can rule these columns into any notebook. If you'd rather not, we built them into our trading journal, The Trader I'm Becoming. It is an undated, 52-week paper journal for stocks, options, futures, forex and crypto, with seven-day weeks so weekend markets count. Inside are a trading plan and rules page, a position sizing sheet, eight setup pages, a mistake catalogue, emotion tags and a tilt protocol, and twelve trade rows a week, each with a PLAN row and a RESULT row. There is a weekly review, and every four weeks a dashboard with an equity-curve grid and an R histogram you draw yourself. It is a notebook for your own records. It contains no investment advice, no trading calls and no promise about results.

The same short weekly look back works outside trading too: see a 15-minute Sunday planning routine and the 9-grid goal chart.

Sources

• NASA Aviation Safety Reporting System
• Aviation Safety Reporting System, Wikipedia
• WHO Surgical Safety Checklist
• Haynes et al., New England Journal of Medicine, 2009

Frequently asked questions