Many traders skip categorising their trades, assuming it’s unnecessary or overly complicated. The belief is: “A win is a win, a loss is a loss — why bother with labels?” But this thinking is a mistake. Categorising your trades is one of the most powerful ways to understand your performance, isolate your edge, and improve results. Without categorisation, your journal becomes a pile of disconnected trades — with no clear way to identify which setups are working, and which are holding you back.

This article explores why categorising trades is essential and how doing so turns raw trade data into actionable insight.

Why traders don’t categorise trades

1. It feels like extra admin:
Tagging trades by type, setup, or context can seem tedious — especially if you’re reviewing dozens of trades a week.

2. They don’t have clear setup definitions:
Many traders don’t have names or labels for their strategies — they enter based on “feel” or loosely defined patterns, making categorisation seem difficult.

3. Focus on outcome over process:
If a trader wins, they think the setup was fine. If they lose, they blame the market. This mindset ignores the deeper process that categorisation reveals.

4. Lack of system structure:
If there’s no consistent approach, there’s nothing consistent to categorise. Discretionary trading without defined playbooks leads to random entries — and random journaling.

Why categorising your trades is essential

1. Identifies your most profitable setups:
Over time, categorisation reveals which trade types are producing the best reward-to-risk, highest win rates, and most consistent outcomes — so you can do more of them.

2. Exposes low-quality or underperforming setups:
You may find that one category of trade consistently underperforms — or only works under specific conditions (e.g. high volatility). This allows you to reduce or refine it.

3. Makes reviews faster and more effective:
Instead of reviewing 50 trades individually, you can review 10 trades per category and immediately spot recurring mistakes or successes.

4. Tracks your edge by context:
Categorising trades by session, market condition, time of day, or even emotion lets you identify when your edge is strongest — and when to sit out.

5. Improves discipline and execution:
If you know you’re only meant to take “A+ breakouts” during London session, and you log a “revenge scalp” during Asia — the accountability becomes immediate.

Useful ways to categorise your trades

• By setup: e.g. breakout, pullback, reversal, trend continuation
• By market condition: trending, ranging, high volatility, news event
• By time of day or session: London open, NY overlap, pre-Asia
• By strategy type: scalping, swing, intraday, macro
• By confidence level: A+, B, C-grade setups
• By emotional state: calm, anxious, overconfident, hesitant

How to start categorising easily

1. Define 3–5 core setups or trade types you take regularly.
2. Create a dropdown or tag column in your journal to track them.
3. Include optional tags like session, volatility, or emotion.
4. Review trades by category weekly to track performance.
5. Use insights to refine your focus — reduce, eliminate, or optimise setups.

Conclusion

The idea that you don’t need to categorise your trades is a myth — and a costly one. Categorisation gives your journal structure, turns patterns into data, and reveals where your edge truly lies. Without it, your trades are just results. With it, your trades become feedback. And feedback is what drives consistent improvement.

To learn how to structure your journaling, categorise trades with clarity, and extract powerful insights from your performance, enrol in our Trading Courses at Traders MBA — where every trade becomes a lesson, not just a result.