Tips on How to Create and Maintain Your Crypto Trading Journal
Success in crypto trading requires a high level of planning and practice. As a beginner, you will need to go through a comprehensive learning process on performance management, and this is where a crypto trading journal comes in. In this post, we will cover everything you need to know about one.
What is a Crypto Trading Journal?
A trading journal a log that a crypto trader uses to record and track every trade they make. Think of it as a tool that helps you review your trades, take note of your of trading mistakes, and improve your execution in the long run.
Let’s dive deeper into the specific ways a crypto trading journal can be useful.
What are the Benefits of a Crypto Trading Journal?
If your trading journal is diligently and consistently up to date, it can steer you faster towards a profitable career in the following ways:
Builds a well thought out framework for trading
To be a successful crypto trader, you should create a useful framework from which you will develop your trading strategy. Having a detailed record of past trades provides traders with sufficient data to examine their trades, assess their win rates, and eventually form an “ideal” trading strategy.
Manages emotional triggers
Active trading requires a lot of psychological and emotional investment. It can be scary, exciting, and sometimes confusing. A crypto trading journal will allow you to document your thoughts and emotions regarding each trade. Acknowledging these triggers guides you to manage them better so that they don’t negatively impact your trades.
Defines your strengths and weaknesses
As a trader, you are accountable for all your trading mistakes. Document every move you make helps you to understand your strengths and weaknesses better. Knowing your weak points goes a long way in helping you identify what you need to focus on to polish up your trading skills.
Keeps you out of questionable trading activities
Due to the high level of volatility and fluctuations in the crypto markets, most traders tend to make unplanned moves. Taking note of such impulsive trades helps you become more aware of the consequences, hence keep yourself disciplined and stick to your initial plan. When you deviate, it is with good reason, and you also document this.
Encourages performance-driven growth
The more trade analysis you do from your journal, the better you will be at adjusting your trading behaviour for optimal performance. After examining your overall performance, always plan on how you can improve your results in the subsequent trading session.
Now that you have the benefits of a trading journal at your figure tips, how do you create your crypto trading journal?
How to Create a Crypto Trading Journal
Developing a crypto trading journal is a simple task. Whether you're a day trader, swing trader, or position trader, you can customise it to suit your trading style. The steps below are a basic guideline on how to go about it:
Step 1. Decide whether you will use a book or a spreadsheet.
A spreadsheet is preferable as it has built-in analytical functions. These will be instrumental in analysing and reflecting on your trades, as explained in step 4.
Below is an example of a crypto trading journal on a spreadsheet.
Step 2. Identify the kind of information you will record
A simple trading journal carries this format:
|Pair||Date||Entry price||Long/Short||Reason||Conviction||Exit price||Exit date||Profit/Loss||Comments|
However, you can add anything else you feel is worth reflecting on in your trading journal. Criteria that can provide more useful information could include:
Reason for trade - A trade could be as a result of fundamental analysis or technical analysis. Sometimes it can be a combination of both. This way, you can to tell which between technical analysis and fundamental analysis brings you better trading results.
Conviction - This refers to your "feeling" about the trade. If, for example, you base your trade on technical analysis and the pattern agrees with a number of your guidelines in your plan, then the conviction is high. However, is the pattern is off, then your conviction is medium or low depending on the factors at hand.
Step 3. Record your trades as soon as you execute
It is essential to form a habit of recording the details as soon as you take a trade - when they are still fresh. This way, you can easily articulate your reasons for trading a certain way. Do these after you have placed your take profits and stop loss.
Step 4. Reflect on your trade data periodically; daily, weekly, quarterly etc
After a particular set period (maybe a few weeks or months so that you have sufficient data), compile the data in your journal, analyse it, and interpret it. A spreadsheet would be handy for this.
If your conviction was part of your metrics, tally the number of successful trades made when either the criteria was high, medium, or low. This data will help you decide whether to trade when your conviction is high, low, or average.
For instance, if you had 16 successful trades and four unsuccessful trades when your conviction was high, then you have an 80% probability of success. The conclusion from this would be it is only worth trading under high conviction.
You can do this with other types of criteria you outlined in your trading journal so that you can review your entire trading performance and improve.
There are several ways in which a trading journal can help you become a successful trader; the reasons we discussed in this article just scratch the surface. The best part: developing your trading journal is a no brainer. It can take any design you like, as long as you are keeping track of the most crucial details useful for your trading style.
If you do not have a trading journal yet, the best time to get started is now. What do you think? Leave a comment below.
About the author:
Jay Jackson is a blockchain enthusiast and a freelance writer at topcryptowriter.com. He works closely with brands (people, businesses and startups) in the crypto sphere. He currently writes Blog posts, Guides, Press releases, ICO reviews, eBooks & Whitepapers. You can find him on LinkedIn.
The above references an opinion and is for informational purposes only. Do not take this as personalised financial or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.
Last updated: 09/10/2019