The cryptocurrency industry has attracted millions of new traders over the past few years. However, crypto trading can be quite overwhelming for newcomers, as there are many differences compared to traditional trading. Strategies may differ, the crypto market is more volatile, and even the terminology differs. All of this takes time to master and until you do it, you're prone to making mistakes. Unfortunately, these mistakes can end up being quite costly. With that being the case, it's in every trader’s interest to make as few mistakes as possible.
The best way to do that is to start keeping a crypto trading journal. This guide will explain what a crypto trading journal is, its uses, and how to start one.
What is a crypto trading journal?
A crypto trading journal is pretty self explanatory. It’s a record that includes details of every crypto trade, whether it’s a long or a short. It should contain times and dates when you opened trades, your trading strategies, and any additional information about the trade. You should also remind yourself why you made that specific trade by recording your motivation.
If you keep your crypto trading journal organized, it can provide you with some deeper insight. It can tell you where you made a mistake if you experience losses. It can also tell you where you missed an opportunity and why. If you record your trading plan, risk management details, and similar details, you can have lots of data to analyze. This analysis shows you what you did right and what you did wrong. Ultimately, it'll help you become a better trader.
Many traders rely on memory, which is a bit of a gamble, especially if you are new to trading. Memories can be unreliable, and you might forget what you did or why you did it. If you engage in day trading, there's simply too much data to remember. Day traders tend to make multiple trades a day, each of which includes its own details. Recording all of them will make it easier to summarize your trading performance.
Why should you use a crypto trading journal
So far, we have established that a trade journal can help you track your trades with greater efficiency. However, let us now take a look at some reasons why you should use a trading journal.
Trade journals help you build a framework for trading strategies
Keeping a crypto trading journal will record your trades and calculations. These will likely be unique to each trade, as crypto trades depend largely on market behavior. Sometimes, you might make a move that wasn't part of your trading plan. However, a change in the market might make it necessary in order to prevent losses. Once you have the details of your trades, use them to create a robust framework for your trading strategy. This can range from futures trading strategies to advanced options trading strategies like covered calls and cash-secured puts.
A cryptocurrency trading journal can help you manage emotions
Emotions are one of the biggest enemies of a crypto trader. Things like greed make traders keep their trades open longer than they need to be. Meanwhile, fear may push traders to close their trade prematurely, resulting in a loss of potential gains. Fortunately, a journal can help you work on your psychological state. It'll help you organize your thoughts, understand emotional triggers, and stay in control. That way, your open trades will be affected by trading signals, not fear or greed.
A trade journal will help you learn your strengths and weaknesses
If you write down your thoughts before making a trade, you can reflect on them later. You'd be able to see what made you make your move, and decide whether it was a good move. That'll help you learn more about yourself, including your motivations. You can use this information to correct your behavior and modify your trading performance. This can even contribute to learning more about risk management.
It helps you come up with a growth plan
Another great benefit of a crypto trading journal is that it can help you come up with a growth plan. You can increase your win rate by recording entry prices, exit points, trading strategies, and alike. You'll see what worked well in the past, and what failed, and focus on positive results. That way, you can learn which trades worked and repeat them moving forward.
How to create your own crypto trading journal?
A crypto trading journal is very simple to set up. You can use a physical notebook, or a document on your computer. You can even create a table and fill it with data as you proceed with your trades. The form of the journal doesn't matter. What matters is what you write inside of it.
With that said, here's the information that should be included:
Date and time of trades
Order type
Trade execution details
Trading instrument (crypto trading pairs)
Length/timeframe of trade
Trade size or position size
Capital limit
Long or short position
Entry point
Exit point
Stop loss and profit targets
Your reason for entering and exiting trades
Stop loss and take profit targets
Ratio examination from gains
Trade outcome — profit/loss
Since this is information that you'll record for personal use, you can add even more details. For example, what goals do you seek to achieve from cryptocurrency trading? Your strengths and weaknesses can also be a good thing to record as a reminder. Your trading philosophies, thoughts on the trade itself, or aspects that need more work. Remember — you should use your trade journal to analyze yourself and your trading performance.
Pros and cons of using a crypto trading journal
So far, we have seen that a crypto trading journal can serve many different purposes. Let us now summarize its pros and cons.
Pros:
A crypto journal can help you identify patterns and improve trading strategies
It can help you become a more successful trader
It'll reveal your personal strengths and weaknesses, showing you where to improve
Use your past trading to grow as a trader
It can help you avoid making impulsive trades
It can help you avoid repeating past mistakes
However, for all its benefits, a crypto trading journal can have a few downsides.
Cons:
You have to pay to use the most efficient trading journals
You need to learn how to analyze the data that you recorded
While trading journals can have their downsides, the benefits definitely outweigh the negatives.
Best crypto trading journal templates
Crypto trading journal templates are ready-made journals that make it easy to record your data. As mentioned in the cons section, you have to pay to use them. However, if you don’t want to make one yourself from scratch, they're a good alternative. Here are some excellent options available today.
OKX
OKX's future analysis tool functions as a crypto trading journal that's definitely worth adding to your trading toolbox. By documenting your crypto trades and giving you an overarching view of all the trades you've made so far, you'll be able to understand your trading performance with a simple glance at the overview dashboard for your various performance stats. With this crypto trading journal tool, you'll be able to track your various trades in a calendar view and further break things down by tracking profitability for specific coins and tokens.
One noteworthy trading journal metric that's worth mentioning is the risk/reward ratio, which compiles the average PnL of losing positions across the average PnL of winning positions. This ultimately gives you the average reward in comparison to the average risk of a position, providing insight into your risk appetite as a crypto trader based on your personal balance between potential gains and losses. Eager to give it a go? Check out our future analysis tool guide for more details.
Coin Market Manager
Coin Market Manager, or CMM, is a portfolio manager that doubles as a crypto trading journal. It comes with numerous practical and attractive features. Its system invites you to upload your trades manually when you create a journal. You can also link your account to your exchange via CMM API manager. That way, the journal will automatically record and categorize your trading data.
TradersVue
Another option is TradersVue, which has multiple analytical tools and other features. Everything that it has to offer can be very useful in trading. The journal also features a sharing option, letting you share your trade records with others. Other included features include: risk analysis, trade notes, auto-import feature, automated price charts, and more. The best part is that this journal has a free plan, although it doesn’t come with all the features.
TraderSync
Another platform designed to record and track your trades is TraderSync. It allows you to record details of your cryptocurrency trading manually, or by importing a .CSV file. It's very simple to use and comes with multiple additional features. One example is a performance evaluator, and another includes detailed reports of your performance. You can also write down notes and analyze your moves. It doesn’t have a free plan; instead, there are three premium plans — Pro, Premium, and Elite.
Do crypto trading journals actually help?
Crypto trading journals are useful, as they can help you learn more about yourself and the market. More importantly, they'll show you how you behave while engaging the market. That can reveal your strengths and weaknesses, assuming that you write everything down accurately. With that kind of knowledge, you can significantly improve your performance and potential gains.
Of course, a crypto trading journal doesn't automatically make you a better trader. You'll still have to learn from your mistakes and work on changing your trading behavior. However, crypto trading journals give you a place to start.
FAQs
A record for crypto trading is simply a recording of transactions that you have performed. By recording this, you can gain insight into your decision-making, and its efficiency.
Starting and leading a trade journal is simple, as all you need to do is record details of your trades. After that, you should also learn to analyze those details, which can be a bit trickier. Once you get a hang of it, you will learn what you did well, and where you made a mistake.
You keep a crypto trading journal by writing down details of your trades. More than that, write down why you made certain moves, what motivated you to do so, and what you expected. This data can later tell you whether your reasoning was sound, or if you had unrealistic expectations.
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