Just like in any other job out there, tracking progress is quite important. It ensures that you are on the right track and helps you identify areas where you might have made some errors and rectify them accordingly. When trading, more so in cryptocurrencies, having a trading journal is very important. It can assist you in the decision-making process and help you justify the trades you are making. Most major trading firms often require that their analysts keep an up-to-date trading journal. Although it might seem tiresome, the journal helps show patterns, be it good or bad ones. With this information, traders can quickly avoid mistakes or capitalize on opportunities without feeling as much self-doubt in the process, which is a sign of a great trader.
Improving every day
When trading in digital assets, the objective should not necessarily make the most money; but to improve your skills every day. This means that your journal should have as much meaningful information on any given trade as possible. From this information, you can gauge the state of mind, attitude, and atmosphere you were making a particular trade-in. Here, the goal is to remove the elements of irrational exuberance and. In its stead, you are asking managerial questions on how the trade would have been better. Here are some reasons why you need a trading journal to make it in this industry:
Keeping a detailed record of your past trades gives you a unique historical perspective many traders lack. Using your records, you can clearly tell how much you traded during any particular period, and of those trades, how many were fruitful. In your journal, you can also indicate which crypto pairs have been giving you the most trouble. Also, those that have been more profitable to make faster moves on them next time.
Eliminating recurrent errors
When you keep an accurate and up-to-date trading journal, you’ll likely start observing patterns in the way you have been buying and selling. These patterns might either be good or bad. Where the patterns are good, you can try to keep them up or replicate them. In cases where you lose money, analyze the origin of the issue, and nip it in the bud.
Eliminating emotional trades
One of the most destructive habits crypto traders have, especially novices, is to make trades from an emotional perspective. That means going into a trade without fully consulting your working strategies and without getting the right confirmations to do so.
An example of an emotional trade that can go terribly wrong is making adjustments to your stop losses hoping that the numbers will go your way. By doing that, you tend to make huge losses on your trades. When you formulate a trading strategy, it’s often best to stick to it if it works.
Using a trading journal
Creating a trading journal is one thing but learning how to make the journal work for you is something else entirely. A seasoned trader who has mastered their trading journal will likely make a lot more money than the one without it. Before you make any trade, you need to have a great reason why that trade should be executed that way. When you take a look at the market, you’ll get some ideas on how to make some money. It’s crucial that you don’t procrastinate on this point since most of these ideas can be forgotten just as fast. Therefore, you should write down as much information as possible and then, later on, observe whether your idea is feasible or not. Your arguments pro a particular trade should also be there in as much detail as possible. Your journal should also have a full account of instances where you don’t do as well. Your failures should also be documented together with the reason why. By leveraging your trading journal, you can learn from your mistakes and become a great trader.