is record keeping mandatory for every trade?

<p id="isPasted">Yes, record keeping is widely considered a mandatory and crucial practice for anyone who is serious about trading, regardless of whether you are an amateur or professional. It is not just a recommendation; it is an essential discipline for long-term success and accountability.</p><p><strong>Here is why it is mandatory:</strong></p><p><strong>1. For Learning and Improvement</strong></p><ul><li>Performance Analysis: A detailed trading journal allows you to review your past trades objectively. You can identify which strategies are working, which are failing, and your overall profit/loss ratio.</li><li>Spotting Patterns and Biases: By reviewing your records, you can uncover recurring mistakes or emotional biases (e.g., "I always exit too early on Fridays" or "I chase losses after a big win"). This self-awareness is the key to improvement.</li><li>Strategy Backtesting: Your journal serves as real-world data to test if your trading plan is actually effective or if it needs refinement.</li></ul><p><strong>2. For Risk Management and Discipline</strong></p><ul><li>Accountability: Knowing you have to write down why you entered and exited a trade forces you to have a clear reason and prevents impulsive, emotional decisions.</li><li>Sticking to the Plan: It helps enforce discipline by comparing your actions against your pre-defined trading plan. If your journal shows you're not following your own rules, you have clear evidence to correct course.</li></ul><p><strong>3. For Tax and Legal Compliance</strong></p><ul><li>Auditing and Reporting: In many countries, accurate records of every single trade are legally required for tax purposes. You need precise dates, prices, quantities, and profit/loss data to calculate capital gains and fill out tax forms correctly.</li><li>Verification: A well-maintained journal provides irrefutable evidence of your trading activities if you are ever audited by tax authorities.</li></ul><p>In essence, if you are not keeping records, you are trading blind, making it nearly impossible to learn from mistakes, measure progress, or comply with financial regulations.</p>