A Trading Journal is both an objective record of your trading decisions (numbers & dates) as well as a subjective record of why you made them and how they panned out.
If you are serious about cryptocurrency trading you must be willing to keep a Trading Journal that is entirely honest. It is too easy to simply screen out the failures and just hang on to successes, but that is a guaranteed way to get rekt.
Keeping a Trading Journal requires a systematic approach to each trade that you make, split between Objective and Subjective categories. The objective elements are suited to a spreadsheet format, while the Subjective are more like annotations.
Objective Elements of a Trading Journal
- What currency pair you are trading
- Your entry price & date/time
- Your exit price & date/time
- Your target exit price & the difference with Exit
- Trade duration
- The type of trade – spot or limit; long or short
- Trade size & proportion of your capital
- Profit/loss from trade
- A clear logic for making the trade
- A measure/index of risk & a confidence level/index for the trade
Subjective Elements of a Trading Journal
The subjective analysis of your trades can be in an annotation form, and record things like how you well feeling, and how much sleep you got the previous night, to notes about things you feel you got wrong and trading skills you should spend time learning about or improving.
When you are at the point of maintaining a trading journal you are showing that you have the discipline to take cryptocurrency trading seriously and are prepared to keep yourself honest. There is no point just recording your successes. If you aren’t willing to record your losses, then active crypto trading isn’t for you.
Most newcomers make the mistake of thinking trading crypto is a matter of getting set up and choosing from the massive menu of available cryptocurrencies. Without applying any process to trading, you run a huge risk of relying on your gut, chasing pump and dump plays, reacting to ‘experts’ on Youtube, Tiktok or Twitter or just trading based on your mood.
Trading without risk management is just gambling, and with gambling the house always wins. Match a trading activity to the funds you have to play with, the amount of time you can commit and a realistic objective.
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