The trading journal is a very underrated tool in the crypto trading landscape, but the truth is that it can come in handy when navigating such a complex market. Relying on instinct is never enough when investing in cryptocurrencies, and every smart trader knows the importance of having a system in place that allows them to take opportunities when they arise and make proper decisions. A trading journal is an essential part of this system, allowing traders to keep a record of their performance and refine their strategies accordingly, as it captures everything from the trading patterns to the wins and the setbacks.

Remember that creating a trading journal requires a bit of effort from you – for example, you must look at the price charts to assess the performance of your trade. The btc price usd tends to experience fluctuations, which often causes traders to make decisions fast and without really thinking about the outcome. In a trading journal, however, you can make sense of your trades, which ultimately helps you avoid potential errors that could turn out very costly.

What are the benefits of keeping a trading journal?

A crypto trading journal can really be a game-changer in your trading journey. First and foremost, it plays a huge role in evaluating your weaknesses and strengths – which can be hard to do once you put your money in the market. As a beginner trader, you don’t really get to take advantage of testing the water setup, but a trading journal allows you to make evaluations of your performance (unbiasedly) so that you can observe how you’re doing. As a result, this helps put things in black and white – especially numbers- which can help you further rethink your strategies to get better results than the ones you’ve achieved so far.

Keeping a trading journal also allows you to identify behavioral patterns that could subconsciously affect your trades. It’s worth noting that trading isn’t solely a battle against the crypto market itself but also against yourself because you will inevitably get stuck in your emotional and cognitive biases even, whether you realize it or not. However, keeping a running tab of your emotions and patterns throughout the trading journey will help you recognize mistakes before they lead to major consequences. Perhaps one of the significant benefits of keeping a trading journal in crypto is that you can build consistency in your chosen strategies, which helps you remain disciplined and maintain a sound judgment even during bear markets. If you have no consistent strategy you can bank on; it’s easy to find yourself struggling in market uncertainty and making emotion-driven trades. Speaking of emotion-driven trades, keeping a trading journal can be really valuable in helping you go out of your way to earn a profit. Traders often act impulsively and irresponsibly, but obviously, this does more harm than good. Impulsive trading is no different than playing with fire – there’s always the risk of getting burned. But this is exactly where a trading journal can help you become more conscious and avoid adding impulse trades in a book of lucrative ones.

What details should you include in a crypto trading journal?

Now that you know the advantages of keeping a trading journal, let’s further take a look at the details you should include in it:

• Date and time. Timestamping trades is essential when keeping a journal, and you can even consider including a comments section to note whether specific factors determined you to set up a trade.
• Traded instrument. This is a straightforward and critical mention that should be in your trading journal. Besides the crypto you’ve traded, you can also mention the platform where you’ve conducted the trade (for instance, “bought BTC on the lighting network”).
• Trade size. You need to include in the journal the percentage of your tradable amount that goes into a particular trade, as this will allow you to evaluate the risk that’s taken in one trade. Let’s say your tradable amount is $100, but you choose to swing trade on BTC with 70$. This means you risk 70% of your tradable amount in just a singular trade.
• Trade direction. No matter whether you want to hold a short or long position in the trade, you need to include a probable time frame for it. Why? It’s simple: it will allow you to stay detached from it, and if you happen to be wrong at the end of the time frame, you can reassess the trade without always HODLing.
• Profit or loss. Another essential detail to record in your trading journal is your trading results, which can be summed as an overall loss or profit for a particular time frame (for instance, a week or a month).
• Entry price, exit price, and stop loss. The entry price is the price at which you enter the trade, while the price at which you exit the trade is known as the exit price – it’s quite easy to understand the concepts, right? Stop-loss helps decrease the downside on trades whenever there’s a call that goes wrong.

The bottom line

A trading journal is your secret weapon in the crypto universe, allowing you to improve your performance by removing bias and emotions from the trades and instead letting numbers and logic guide your decisions. However, a mental barrier stands in the way of keeping a trading journal: time commitment. While for some veteran traders, it can be suitable to take trading notes in large notebooks, or build dashboards in Excel, this isn’t the case for each trader out there. Fortunately, there are ways to journal your trades without spending so much time on it – you can rely on automation to reduce journaling hours to only a few seconds.

Apart from maintaining a trading journal, conducting an analysis of it is also recommended, enabling you to reflect on your trades and recognize weaknesses and areas that can be improved. Ultimately, doing this will help you enhance your performance as a trader and do better in the future, so you can get closer to your goals.