How to Review Your Investment Journal: Separate Decisions, Execution, and Results
Record the information available at the time alongside actual orders. Use journal reviews to reduce outcome bias and identify recurring errors in costs, execution, and position weights.
Reviewing an investment journal means separately examining whether a trade was profitable and whether the decision process was sound. Preserving the rationale at purchase, planned risk, and actual execution helps reduce the tendency to rewrite your memory once you know the outcome. The purpose is to identify recurring gaps between decisions and execution rather than focus on a single success or failure.
Record the plan before placing the order so it can be checked later
Record the trade date, investment rationale, publication dates of supporting information, conditions that would change the thesis, and planned position weight. Rather than recording only a target price, documenting the earnings and valuation assumptions used to calculate it makes review easier. Collecting good news after buying to write your rationale cannot reconstruct the actual decision at the time. Add subsequent information under a new date rather than overwriting existing statements, preserving the sequence in which information changed.
Evaluate results, analysis, and execution separately
Return is the outcome, the validity of the buying rationale is the analysis, and adherence to order prices and position weights is the execution. Even with good analysis, excessive share purchases indicate a process problem; even with flawed analysis, a market rally can make money. During review, compare planned with actual quantities, reference with execution prices, and expected with actual holding periods. Omitting costs and currency effects can overstate performance attributable to company analysis.
Translate the review into one next action without generalizing too soon
After gathering records, classify errors into insufficient information, calculation mistakes, execution deviations, and changed assumptions. Do not assign every loss the same cause; define a specific checking procedure to change for the next trade. However, changing the entire strategy after a few losses can create a small-sample problem. Gather enough cases of the same type and check whether market conditions differed. Keep hypothetical performance from trades you did not actually make separate from realized performance.
You can also briefly record decisions not to trade. However, selecting only stocks that later rose sharply and labeling them missed opportunities exaggerates the performance of trades not taken. Record why you deferred and what information you could not verify at the time to evaluate the selection process. If you introduce a new rule, mark its start date and examine subsequent records for fewer errors, but do not treat a short-term increase in profits as conclusive evidence of improvement.
Worked example
Hypothetical example: A trade planned at a purchase price of KRW 20,000 for 100 shares and an expected exit price of KRW 19,000 instead buys 150 shares at KRW 20,100 and sells at KRW 18,900. The planned price loss is KRW 100,000, but the actual price loss is KRW 1,200×150 shares=KRW 180,000. Rather than blaming the entire KRW 80,000 difference on the market, separate the increase of 50 shares from the per-share execution differences. Add fees and other costs separately, and make checking the share count immediately before ordering a concrete action for the next trade.
What to check
- Have you dated information available at the decision separately from later information?
- Have you evaluated returns separately from analysis and execution?
- Have you calculated the difference between planned and actual quantities?
- Does the review lead to a specific action for the next trade?
Sources and primary materials
This is educational material about research methods. For an actual company decision, verify the filings and primary sources for the relevant period.