When trading, we will definitely minimize a loss, therefore there must be a special strategy to minimize the loss, one way is to create a trading journal. Read the article below to find out about crypto trading journals. Before that you can read trading articles on the GIC website. You can also follow GIC's Instagram and YouTube to get more education about trading.

What is a Crypto Trading Journal?

A trading journal is a daily book where a trader records their trading decisions and results. This will be accompanied by analysis, additional information (such as charts and current trends), and what led them to make the final investment. Another aspect is how much the trader decided to invest or sell, and why. This kind of information, and trading results are key to helping traders grow and learn from their successes and mistakes. A crypto trading journal is a record of your trades as a cryptocurrency trader, your trades and the reasons behind them. The reason behind keeping a crypto trading journal is to track the performance and logic behind all trades, essentially justifying each move. This vital tool takes the guesswork out of it and gives you a template that helps identify your trading principles. Without it, cryptocurrency trading would be akin to gambling. Simply put, a crypto trading journal combines planning, reflection, and consistency.

Crypto Trading Journal Functions

Still doubt the function of trading journals in minimizing losses? Try to see the functions of crypto trading journals below:

Trading Performance Evaluation

Once your money is in the market, there are no trial rounds or mock simulations for you to observe and assess how your trades are doing in the market. Now, for beginners, there is no real ‘testing the waters’ setup. So, for starters, a trading journal is the best way for them to evaluate their trading performance and identify their strengths and weaknesses. A simple evaluation of your trading performance can be done by observing your trading journal without bias. Examples of evaluations you can do are:
  • “Are my swing trades failing more than my long positions?”
  • "Is my short trade not worth the effort?"
  • “Am I losing more money by HODLing than booking profits?”

Avoiding Impulse Buying

Similar to the previous benefit, having a trading journal restricts traders from going out of their way to make money in the market. This usually happens when a consistently profitable plan suddenly breaks down. This leads to trading in a spontaneous manner. And this is usually an emotional act and compensation for a one-time loss. And before we know it, the spontaneous reaction does more harm than good, and the losses add up. Simply put, impulsive trading is playing with fire. Here, having a trading journal helps traders take emotions out of the equation. Spontaneous trades can be easily avoided because writing them down in a journal makes traders more aware and less likely to add impulse trades to their profitable books.

Risk Management

Third, the function of creating a trading journal is to carry out risk management by assessing the level of risk that can be taken based on all trading variables, such as areas to avoid, risk levels, and so on. Risk management is assessing the level of risk that you can take based on all trading variables. By recording each trade in a journal, you may be able to find areas that need improvement and development in the future.

How to Create a Crypto Trading Journal

Creating a trading journal is very simple and you can also match it to your specific trading style and goals. Here are the basic ways to create a trading journal:
  • Pilih platform atau tools
You can choose between spreadsheet or book. As a suggestion it is better to use spreadsheet. Because Google spreadsheet has its own built-in analytics function.
  • Identify what information will be recorded. (Example: underlying asset, trading date, position size etc.)
You can write down anything you feel needs to be recorded or noted in a journal. Some traders even add criteria for how they feel (Psychology) emotionally when they trade. So whatever you feel if it is suggested to help you then write it down in your journal.
  • Record your trading live or directly
after you have finished taking profit and placing stop loss. Make a habit of writing down the details of the trade right after the trade, while it is still fresh. This way you don’t have to remember why you made the trade. Make sure to do this only after placing your stop-loss and take-profit.
  • After a specified period of time (daily/monthly/weekly)
After a certain period of time (weeks or months), but it is better if it is in a few months so that you also have enough data to be able to match the data in your trading journal. Compile the data that exists or that you have and try to evaluate the trading methods that you have done. You can do several different types of methods so that you can improve, develop and evaluate the trading that you do.

Crypto Trading Journal Example

To understand the trading journal more clearly, see the image below so you can get a better picture:

Here is an article about crypto trading journals, hopefully it can help you in your next trading! Start trading now only at GICTrade, show your trading skills!