Decision journal
Why should a trader write down the reason for a decision at the moment it is made, not afterwards?
In plain words
A decision journal is a written record made at the time of a decision, capturing what was believed, which evidence was used, and what outcome was expected. Written before the result is known, it can be compared later with what actually happened.
Why it matters
Memory rebuilds the reasoning after the outcome, so a lucky result can look like skill and an unlucky one like bad luck. A record fixed at the time keeps the reasoning testable, and repeated reviews show which kinds of reasoning hold up across many decisions rather than one.
In a real week: BTC, week of 1 February 2021
In the week of 1 February 2021, BTC opened at 33092.97 and closed at 38795.69, a return of 17.23%, placing its weekly return in the 94th percentile against 155 weeks of history. A journal entry written on Monday, when the week's low of 32296.16 was set at 00:00 UTC, could later be checked against that reasoning alongside the recorded funding average of 0.0707% per eight hours and volume of 21.6 bn, labelled above its prior 12-week average. The four prior weeks were mixed: 15.61%, -6.08%, -9.95%, 2.58%.
A common mistake
Writing or rewriting the entry after the outcome is known. A review only tests the reasoning if the original version is kept unchanged from the moment of the decision.