How to Record Exit Reason
in a Trading Journal?
Learn why recording the specific reason a trade was closed is essential for reviewing exit criteria discipline over time.
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This lesson explores the second key element of a trading journal entry: recording the specific reason a trade was closed.
This lesson connects directly to the exit criteria concept from the Trading Essentials module and the stop loss and take profit units from earlier in this Risk Management module.
What Does 'Exit Reason' Mean?
Exit reason refers to a written record of why and how a trade was closed — for example, whether it was closed via a pre-set take profit or stop-loss order, manually closed based on a change in market conditions, or closed for some other specific reason.
Why Distinguishing Planned from Unplanned Exits Matters
An important distinction to record is whether an exit followed the pre-defined exit criteria (covered in the Trading Essentials module) established before the trade was opened, or whether it deviated from that plan — for example, closing a position early out of anxiety, or moving a stop loss emotionally (a mistake covered in the Trading for Beginners module and revisited in the Stop Loss unit of this module).
Connecting Exit Reason to Risk-to-Reward Review
Recording exit reason, alongside entry reason, allows for a meaningful comparison against the planned risk-to-reward ratio (covered earlier in this module) for that trade — showing whether the actual outcome aligned with what was planned, or deviated from it, and why.
What a Complete Exit Reason Record Might Include
A thorough exit reason record might note whether the exit was via a pre-set order or a manual decision, whether it aligned with the originally planned exit criteria, and if it deviated, what specifically drove that deviation.
🔖 Summary
Recording exit reason — including whether a trade closed via pre-set orders or manual decision, and whether it aligned with planned exit criteria — supports meaningful review of exit discipline over time. Comparing recorded entry and exit reasons together allows for direct comparison against a trade's originally planned risk-to-reward ratio.
Frequently Asked Questions
What is exit reason in a trading journal?
It's a written record of why and how a trade was closed, including whether it followed pre-defined exit criteria or deviated from the original plan.
Why is distinguishing planned from unplanned exits important?
It helps identify whether deviations from the original exit plan, such as closing early out of anxiety, are becoming a recurring pattern worth addressing.
How does exit reason connect to risk-to-reward review?
Recording it alongside entry reason allows comparison between the planned risk-to-reward ratio and what actually occurred, showing whether outcomes aligned with the original plan.
What should a complete exit reason include?
Whether the exit was via a pre-set order or manual decision, whether it aligned with planned exit criteria, and the specific reason for any deviation.
Risk Warning
Trading forex and CFDs involves significant risk and may not be suitable for all investors. You may lose all of your invested capital. Please ensure you fully understand the risks before trading.
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