A civilized person is in touch with his past. Understanding what has gone before helps you deal with the present and face the future. A trader who keeps a diary can learn from the past instead of mindlessly repeating mistakes. A trading diary provides a private mirror, a valuable feedback loop. It is probably the single best learning tool avail-able to traders.

A trading diary is both a visual and written record of your trades. You can keep it on paper or in electronic form. I started keeping mine such a long time ago that I still do it on paper, using scissors and double-stick tape to paste up charts. You can follow these instructions or adjust them and convert your diary into electronic format.

A trading diary is an album, 11 ? 14 inches or bigger. Assign each twopage spread to a single trade. Whenever you enter a trade, print out the charts that led to that trade, and paste them on the left page. Each chart is about 3 ? 5 inches, with the weekly on top, followed by one or two dailies and sometimes an intraday chart. Write down the name of the stock, the date, and the number of shares bought or shorted. Add a note on the fundamentals if they had anything to do with that trade. Comment on how you first became aware of that stock-a scan of the database, a tip from a friend, or an article in a magazine or a newsletter. This allows you to track the sources of your information. Use a pen to mark indicator signals and chart patterns that led you into that trade. Write a few words about your feelings entering that trade (anxious, happy, confident, unsure) and note any unusual factors and circumstances.

I keep my diary at home, and if I trade at the office, I bring my printouts with me and paste them up in the evening. It takes time to clip the charts, tape them into my album, mark them up, and write the commentary. This discipline reminds me that trading is what I do, and trading takes priority over almost all other activities.

Repeat this process after exiting a trade-print out the charts and paste them up on the right page of the album. There are usually fewer charts on the right, as the weekly chart does not always figure in the exit. Mark up trading signals and write down your comments on the cir cumstances of the exit, including your feelings about it.

As your diary grows thicker, this visual record of your trades becomes more and more valuable. Keep going back, leafing through your diary. How do those signals look now? What are you happy with, what would you have done differently, what lessons have you learned? Most traders never ask themselves these questions. When they make money, they swell with pride, and when they lose, they feel angry or ashamed. Wallowing in feelings will not make you a better trader. Our losses can teach us more than our gains. A trading diary helps you put aside selfkicking or self-congratulation and pay attention to the facts. It helps you learn and succeed, helps you become free.

Nobody can give you a trading diary. You have to create it yourself, and your ability to maintain it will provide a running check of your discipline. Whenever you make some money, leaf through your diary and ask whether you could have done any past trades differently in light of what you have just learned. When you lose, do not kick your-self but write a good note on that trade, go back to review past trades, and think how to avoid such losses in the future. Learn from your prof-its and losses.

To learn even more, go back to each completed trade approximately three months after an exit and print out the current charts. Tape them to a sheet of paper, mark them up, and attach that flyleaf to your exit page. Now you can revisit your trades with the benefit of hindsight for an extra dose of trading education.

What if you are a very active trader or day-trader, making so many trades that a diary entry for each is simply impractical? In that case, have a diary entry for every fifth or every tenth trade listed in your Trader's Spreadsheet. You can add other trades to your diary if they are especially important, but be sure to maintain the discipline of every fifth or every tenth trade.

Keeping a diary and learning from your trades is as close as you can come to a guarantee of trading success. Be sure to strictly observe money management rules so that a string of freak losses doesn't toss you out of the game while you're still learning. Follow the rules, keep a spreadsheet, equity chart, and a trading diary, review them, learn from them, and you'll have everything it takes to become a successful trader.