Trading is a high stakes game, we lose some trades and we win some trades. Infact, according to statistics, less than 5%
of traders are actually profitable. It takes more than a good trading system to be profitable. Traders actually need a trading plan (I'll need to do another post for this) to follow, and of course a trading journal to record their progress so that they can actually be able to determine their level of profitability long term. Today, we'll be looking at a trading journal, what it's all about, and how every trader can incorporate this powerful tool into their trading system inorder to track their trading results accurately.
What Is A Crypto Trading Journal?
A crypto trading journal, refers to a document where a trader records everything they do in the process of trading. From risk management, information about trades made right down to even a trader's strategy development, all this information is recorded in a trading journal. This journal can be in the form of a hardcopy document, or even a soft copy document depending on the trader.
This document will help a trader track his performance, and if it is used properly, it could be a complete game changer for any trader.
A trading journal works in 2 parts. Firstly, you'll need a spreadsheet and then you'll need a document. The spreadsheet will be designed for recording information about trades, while the document will be used to record your thoughts about every trade, the conditions which led to the trade (technical and fundamentals Analysis related to that particular entry), possible recommendations, unique happenings, as well as possible developments in strategy. Some key information which should be in your trading journal includes;
• Trade Entry Date
• Trade Exit Date
• Trade Pair
• Take Profit Level
• Stop Loss Level
• Entry Price
• Exit Price
• Profit or Loss from each trade
• Notes About The Trade
All the information gathered in the trading journal can be analysed by a trader and used to improve their trading game and their profitability in the long run. Now that you have your journal set up, let's take a look at how to use it.
How To Use A Crypto Trading Journal
Trading is usually accompanied by high emotions. This is because real money is usually involved or in the case of crypto trading, crypto assets are usually on the line. Most often, traders make trading decisions based on emotions and not logical thinking. This is where a trading journal is helpful.
Now, before entering any position, a trader will be required to write down the circumstances that led to the trade, what was the market behavior at that point in time? Was there a particular chart pattern or candlestick pattern which led to the decision? Was there a strong signal from the indicator? Or was it based on fundamental analysis? This will make sure a trader is actually making a logical trading decision, and not just trading based on emotions.
Next, the spreadsheet comes into play. Once the trade is executed, a trader is required to enter all the information listed above in the spreadsheet. Now, a trader is able to track exactly how much profits he or she is making, they'll know exactly if to keep trading, or when to take a break. This will also help to improve a trader's psychology.
Why Should You Use A Trading Journal?
• A trading Journal helps a trader become even more accountable.
• It will help a trader analyse every trade opportunity even more before making an entry.
• It is a perfect tool which can be used by a trader to track profit and losses over time.
As we have seen, a trading journal is a very easy to use but powerful tool. It can be easily added to any trader's trading system a d I would even go as far as recommending it. When used properly, it can become the game changer of your trading game. What's even more wonderful is the fact that you can begin using it today. Get to work with this powerful tool, and trust me when I say you won't regret it.
Thanks for reading 👊
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