Things You'll Need

Instructions

1

Create the date of the first trade and enter it in column one. In column two enter the name of the stock, bond or security invested. Enter the symbol in column three and in column four enter L for a long trade and S for trades begun from the short side.
2

Mark column five as the 'open' trade. Whether you are long or short, the open trade is the price at which you entered into a trade. Mark column six as the 'close' and enter the price at which you exited the trade. Subtract column five from column six if column four is entered as L. Enter the result in column seven. This is the profit or loss of a long trade. If column four reads S then subtract column four from column six and enter in column seven. Enter the purchase and sale commissions in column eight and nine.
3

Establish dividends and tax status. Enter in column seven the date of the 'close' action in column six. Use column eight to total any dividends received. Use a column 10 for any distributions that are a return of capital. Column 10 is a rarely used column.
4

Understand that taxable income consists of short term capital gains, long term capital gains and dividends. Take the dividend income total from column eight for the investor's ordinary income. Compute the long term gains by adding all gains longer than a year. Net this against any long term losses. For gains and losses less than a year net the results and total.
5

Expand your trading log to compute measures of risk and success. Create a column for aggregating total profit and compute average profit per trade, the number of profitable trades to unprofitable trades, and the ratio of average risk to average profit. These all represent profitable tools for improving one's trading. All can be easily derived once the basic system described here is instituted.