Why Bitcoin Investors Should Create a Personal Crypto Trading Journal to Track Performance
Since cryptocurrencies exploded in 2017, there was no lack of traders and investors in the crypto space. However, one of the things that allow newcomers to gain valuable experience and rise to the rank of a crypto trading professional is leading a trading journal.
Trading journals allow traders to keep track of their performance, reasons for different trades and investments, and alike. They can help traders develop a skill to recognize a good trading opportunity by sharpening their decision-making process and critical thinking. This is why most trading firms always have analysts who keep trading journals which explain the motivation behind trades, investments, and similar business decisions.
In the end, trading journals can also help with noticing patterns in traders' way of thinking and clearly displaying their technique. If their decisions result in the loss of funds, traders can realize where they made a mistake and work on bettering their judgment.
Improving Trade Decisions Through Trading Journal
As mentioned, keeping a trading journal can help traders with learning to better themselves in accordance with their past trading decisions. The more records traders make, the better their future judgment can get. When starting to lead the trading journal, traders should begin by describing their mental state.
In other words, they should record their emotions when entering the trade. This can be one of the first indicators regarding whether they should go along with their trading decisions or not. If they cannot report feeling confident about the decision, that usually indicates that there is some level of doubt that the trader may have been unaware.
Even if they decide to go through with the decision, but they have described it as a risky trade, they can draw further conclusions depending on the outcome. This way, they can learn more about themselves and their trading skill, as well as minimize losses during the future trades. By continuing the practice, traders will sharpen their skill and sense, which will ultimately result in changing their views on the trading opportunities.
Notice the Change in Trading Performance
Naturally, the trading journal should also list details about the trade, which may be obvious at first. Things such as the date, records regarding the profit or loss, entry and exit position and alike should all be recorded.
This can help traders analyze their past trades and see where they made a mistake, or what was the right call at the time. These conclusions will become easier to make in time, as their trading skill increases, and they learn more about the more delicate workings of the crypto market. It might also be a good idea to take note of how various outside forces — such as news and announces — impact the market, prices, and other aspects of the coins trader is interested in.
Recording The State of the Market
Finally, traders should also remember to note the state of the market during their trades, but also when they are not trading. This may help with understanding how the market works, which leads to noticing patterns over longer periods of time. Learning how the market “breathes” may be crucial for knowing when to make a trade, which coins to go for, which days or parts of the year are the best for trading, and alike.
Noticing such changes in the market can also allow traders to prepare for potential surges or drops, as well as recognize early signs of what may be coming. It is not easy to become a professional even with a tool such as trading journal. However, with the crypto market being as volatile and unpredictable as it is, traders should learn to rely on any advantage they can get.
While the final decision depends on the trader alone, sharpening their trading skills and senses is certainly one of the most valuable moves to make, and the best investment that future professional traders can make.