Recently, I had a chat with someone that wanted to know why he should use an online trading journal vs his own trading spreadsheet. My answer was quick and somewhat brutal.
“Why drive a ford when you can drive a Lambo.”
Another way to put it:
“I’ll give you two options. The first one is free, but it won’t increase your returns. The other is paid and will most likely increase your returns. Which one would you go with?”
If you are used to an excel or google sheets trading spreadsheet, you are probably thinking why use an online trading journal to track pnl, account balance and current holding. That’s what 90% of the trading spreadsheets do. It’s okay to think that, after all, you never used an online trading journal and you don’t know what to expect, but the truth is an online trading journal can do everything that a trading spreadsheet does and much more…faster and better.
When I searched online for a trading spreadsheet, I found simple ones like this:
That is easy to maintain, but it doesn’t tell HOW to make more money or WHERE I am making mistakes. It’s like being an accountant that only cares about the cash balance of the company.
I also found more complex trading spreadsheets like this:
But who has time to fill each and every column for every trade? Besides wasting time, you only get a fraction of the value of an online trading journal. A Trading spreadsheet is free and you get to control the data in it, but again it doesn’t help you make more money, only track it. Here are more disadvantages of a trading spreadsheet:
- You have to add your trades manually. The more you add, the slower it gets. If you are a daytrader, forget it.
- It’s hard to integrate live quotes to track your portfolio/holdings.
- If you don’t find one online, you have to program your own metrics.
- It can get corrupted with lots of data. The more you add the bigger the chances.
- You are limited to what your excel knowledge can do.
- It could have viruses hidden in macros, if you downloaded from the web.
- You have to maintain it yourself.
- It may not work for futures contracts because of multipliers or you have to program to make it work.
With an online trading journal, you get to go deeper into your trading patterns. For instance, you could ask an online trading journal how many longs were profitable on AAPL, what time frames were most profitable and for how long you held each winning trade on average for the first week of September.
In order to improve your trading, you must ask hard questions that a trading spreadsheet can’t answer.
Here are more advantages of an online trading journal:
- Easier to maintain and enter your trades regardless of how many trades you do.
- Commercial grade software made with the sole purpose of improving your trading performance.
- Relational database-powered meaning fast and unlimited ways to explore and view your data.
- Your data is stored in the cloud, accessible anywhere and fully backed up.
- No need to download, install updates or maintain.
The downside is that most of them are paid solutions, although Trademetria is free if you trade less than 30 times a month. In addition, your data is in the hands of a third-party vendor.
You only get to live once and unless you have unlimited trading capital and time, you can’t afford to lose money trading. The faster you succeed, the better you will be. An online trading journal will get you the information you need faster and accurately, while an excel/google trading spreadsheet will most likely bring you irrelevant and insufficient data about what really goes on in your trading.
Are you ready to discover what you have been missing? Get a free account at trademetria and start a new way to improve your trading performance.