What is a trading journal? And how to use one.

Every action you perform as a trader is recorded in a trading diary, which includes risk management, trading method evaluation, psychology, and other topics.

One approach to remain current on market trends is to monitor price fluctuations using charts. Technical or fundamental analysis, as well as following other market data, are not the only ways to become a good trader. A disciplined strategy, such as keeping a trading notebook, would, for example, keep you from making emotional judgements about your financial investments.

In this post, we will look at the advantages of keeping a trading notebook as well as how to set one up and utilize it.

What exactly is a trading journal?
A trading diary keeps track of your deals and their results, as well as providing a summary of your trading experience. It is not, however, a brokerage account statement in which one may identify the grounds for choosing or avoiding a trading plan.

All subsequent deals are carefully prepared, and a trading log may be used to keep track of the performance of each trading strategy. A trading log allows you to examine the possibility of a certain deal regardless of how the market performs.

Furthermore, creating a trading notebook does not need a large investment. Spreadsheets or Excel would suffice, and they would assist you in being disciplined and consistent in your trading techniques. If you can’t always adhere to your trading plan, you should keep a trading notebook. You may learn how to avoid reacting the same way to similar circumstances in future deals by keeping track of what goes wrong and why. Why is it necessary to maintain a trading journal? Continue reading to find out!

What are the advantages of keeping a trading journal?
Keeping a trading notebook has several advantages, including assisting you in evaluating the strengths and shortcomings of your trading approach. It allows you to make objective conclusions. For example, one might determine if crypto derivatives are best suited to their portfolio or whether to begin reinvesting crypto gains. The final choice is free of mistakes in judgment and illogical views, which protects you from an unintentional effect on your investing goals.

Keeping a trading diary, whether you are a day trader or a swing trader, helps you keep on track with your trading plan. It is quite easy to get sidetracked by profits when trading for real money. After a string of successful transactions, you might begin to experiment with different entry places or purchase more bitcoin than normal. A trading strategy keeps you focused and decreases your tendency to make impulsive, perhaps hazardous deals.

Trading in the productive zone is possible if one keeps track of their trading strategy and develops confidence in their abilities. A trading notebook can be a great motivation for traders to reflect on how well they have done, and having a strong track record is always a great confidence booster. Unsuccessful traders, on the other hand, may learn from their errors and turn ineffective trading techniques into winning ones.

Furthermore, by utilizing a journal to document and apply replicable patterns, one may capitalize on what works and move their focus to current performance. This allows traders to make a consistent profit while also preventing them from wasting time and resources on poor ideas, thus assisting them in becoming lucrative traders.

How do I start a trading journal?
A trading diary may be created using any spreadsheet tool such as Microsoft Excel or Google Sheets to record your actual transactions and a written document such as Microsoft Word or Google Docs to add your comments. You may also begin utilizing a free trading notebook template, such as the one created by Binance, to differentiate between an avoidable and lucrative trading approach.

Regardless of the design you choose, make sure you have all of the relevant columns for each deal. You may also take screenshots of the trading charts you’ve been following and link them to the proper transaction on the sheet to make the diary more effective.

Let’s look at the columns you should include in your spreadsheet while constructing a trading journal:

Instrument: Enter the financial instrument you traded, as well as the platform you used; for example, Bitcoin (BTC) on Coinbase.

Date and time: Include any time and date-specific parameters that allow you to conduct a specific deal. For example, I paid $1,000 for Cardano (ADA) during a noon trading slowdown when ADA was available at a cheaper price around 1:00 pm. Because most major news articles have already been covered by noon, crypto prices often fall during the pause.

Trade direction (long/short): Keep track of your short and long holdings to help you rethink your trading approach. Long positions expose an investor to cryptocurrencies with the belief that prices will rise in the future, enabling them to be sold for a profit.

When investors sell bitcoin “short,” they borrow it and then sell it at the current market cost. When the asset’s value falls, the investor purchases it at a lower price, repays the bitcoin borrowed, and retains the difference as profit.

The entry price, exit price, and stop loss are the prices at which you begin the transaction. The figure at which you leave that deal is referred to as the exit price. In trading, investors may set up a stop-loss order to automatically submit a sell order when and if the lowest price at which they are willing to sell an asset is achieved. Keep track of all of these data in your trading notebook.

Transaction size: In order to understand how much risk you are taking with a certain trade, note your “tradable amount” in the diary. For example, if your tradable amount is $200 and you swing trade on ADA with $170, you risk 70% of your tradable amount on a single transaction.

Profit and loss: It is important to keep track of the result of your transaction, whether it is a profit or a loss, in order to discover what works best for you and what does not.

Notes: As previously said, including your thoughts/notes in Microsoft Word or Google Docs to reflect on why you choose a certain trade size or technique. Remember that qualitative as well as quantitative elements are crucial.

How to Use a Trading Diary: There is no such thing as a perfect trading journal template. While adding transactions to their own trading notebooks, every trader should analyze the relevant metrics they require or should avoid using. In light of this, a trade newspaper should be adapted.

Use your written material to explain why you took certain viewpoints. To prevent adversely damaging your trading success, it is also critical to jot down the signs you see during your market watch hours. In your written piece, you’ll also discuss whether or not a certain trade notion you applied is sound. Turning your trade offers inside out and backward will allow you to identify the benefits and drawbacks of each one.

Then go to your spreadsheet and record your daily trading actions. Remember to keep it up to date and structured in order to correctly assess your success or failure. Finally, attempt to record transaction data after the deal is completed to prevent missing any critical descriptions.

Furthermore, monitoring your transaction log spreadsheet on a regular basis is a useful practice for analyzing your present level of exposure and any potential for extending your trading portfolio. But how can you go through your trade log spreadsheet? While assessing your previous transactions, carefully look over the documentation on the written document and entries in your spreadsheet.

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