Let’s review what you’ve learned so far from previous lessons about creating a crypto trading strategy.
- How to use fundamental analysis to look at a cryptocurrency, develop a directional bias (“bullish” or “bearish”), and generate potential trade ideas (go “long” or “short”).
- How to use technical analysis (TA) and price action (PA) to identify entry prices (“entries”) for your trade, as well as exit prices (“exits”) to take a profit or cut your loss.
- Three key concepts in trade and risk management to survive as a trader.
The last required task for our discretionary trading process is keeping a trade journal.
What is a crypto trading journal?
A trading journal is a log that you use to record your trades. It tracks your trading performance and more importantly, helps you reflect upon previous trades and learn from any mistakes made.
Taking notes and writing out your thoughts are skills many people do not practice or enjoy on a regular basis, but when it comes to achieving competency in your craft, this is a habit you should take up quickly.
A disciplined trader is a profitable trader and keeping a trading journal is the first step to building your discipline.
Journaling is a process that seems to be required in most professions, not just in the trading world. Doctors take notes on patients’ health and treatments.
Professional athletes break down and review practices and games, taking notes to find ways to improve their craft on and off the court.
In general, taking notes and journaling is a valuable task for achieving any goal in life. As the saying goes, “You can’t manage what you don’t measure.”Without a journal to track your trading business, the odds are pretty high that you’re going to forget pieces of your analysis, trading plan, and catalysts to watch out for. You’ll likely make the same mistakes over and over, and never see real improvement in your trading performance.
As you go through each step in the discretionary trading process, jot down your observations and thoughts like your life depends on it because, in one sense, it kinda does.
That money (your “trading capital”) you’re putting at risk represents energy and time you’ve given over your life, so take this task as seriously as a doctor or professional athlete would.
What’s in a trading journal?
Here’s a sample of what you’d include in a trading journal:
- As you read the news daily to get a view of how markets are behaving, write down any notable news and events and your biases/expectations.
- Use fundamental analysis to develop a directional bias and generate trade idea(s). Write them down.
- Use technical analysis and price action to spot entry and exit points. Write them down.
- Write down your trade and risk management plan.
- Separate your trade ideas between ones that are “ready to go live” and ones to “stalk” on a watchlist (those ideas that haven’t met all of the criteria for a live trade yet) in your trading journal.
- Track pending orders and open trades.
- Adjust your trade and risk management plan accordingly to new developments. Document these adjustments.
- After closing a trade, note the market’s behavior and write down why your trade did or did not work.
Regularly review your trading journal and see if there are any lessons to be learned and adjustments to make to any of your processes going forward.
If you don’t have experience with journaling or have no idea about what to journal, you can learn more in the School of Pipsology’s lessons on “Keeping a Trade Journal.”
But before you head over there, keep in mind the one trick that significantly raises your odds of successfully developing a journaling habit: Keep it simple and be consistent.
Even if all you have is an online spreadsheet with three columns of data, one being the “Date,” another being “Market Thoughts” filled with generalized observations, and the last being “My Market Expectations,” it’s a great starting point!
|Date||Market Thoughts||My Market Expectations|
Remember that you’re just beginning your journey and it doesn’t have to be perfect.
You just have to do it.
If you can scroll through TikTok every day for hours, then you can spend a fraction of that time journaling.
It will get better over time as long as you stay consistent with your efforts and apply what you learn along the way to make your journal better.