Many people kept a journal when they were young or still do when they are older. A journal is extremely useful for looking back on events that happened in the past. In this way we learn from the mistakes we have made before and we see where we come from.
Crypto traders also use a journal. A trading journal to be exact. In a trading journal, crypto traders keep track of which cryptocurrencies they have bought and all the important information that goes with them. For example, crypto traders want to get better at trading cryptocurrencies.
Successful crypto traders even swear by using a trading journal. They indicate that without such a ‘crypto journal’ they would never be so successful.
What is a crypto trading journal? #
A crypto trading journal, also called a crypto trading journal, is a document in which you keep all information about your purchases and sales. For many successful crypto traders, a trading journal is an indispensable tool that contributes to their success.
For example, in a trading journal you keep track of which cryptocurrency you bought, at what price you did that, why you decided to invest, at what price you want to sell the cryptocurrency and at what price you eventually sold it. In other words: you keep track of everything related to the trading of cryptocurrencies in the trading diary.
Every crypto trader who uses a trading journal does so in his or her own way. This means that there is no format that such a trading journal must comply with. As a trader, you can therefore use your own variant of a trading journal. We will give you a number of examples and practical tips further in this article on how you can best use a trading journal.
How to make your own trading journal #
A trading journal can therefore be a useful tool when you are active as a trader. As a beginner, it may be overwhelming. We are therefore happy to explain step-by-step how you can set up and maintain a trading diary yourself.
Step 1: Decide where to keep the trading journal #
First you will look at where you want to keep the trading journal, and how you will do that. Many people prefer a trading journal on the cloud. For example, consider Google Drive. The advantage is that you can then access the trading journal anytime and from any device.
On the cloud that you use, you can upload a document, such as an Excel or Word file. Within these programs you can adjust the trading journal to your wishes.
There are also programs available online that serve as trading journals. You often have to pay to use these programs. That is why it can be more economical to put a file on the cloud yourself. Ultimately, this is what the trading journal content is all about, not its form or appearance.
Step 2: Decide what information to keep #
Successful crypto traders will say that it is best to keep as much information as possible. That’s true, because the more you commit, the better it is for the trading journal’s operation.
In a crypto trading journal you could keep the following things:
- The cryptocurrency you bought;
- The date of purchase;
- The price value at the time of purchase;
- The number of coins/tokens you have purchased;
- The total amount you paid for these tokens/coins;
- Did you buy the coins for the short or long term;
- The reason to buy this cryptocurrency;
- At what level did you place a stop-loss;
- The intended return;
- The date of sale;
- The return that you ultimately achieved;
- The reason why you won/lost money;
- How did you feel when you made the purchase;
- How did you get to know the cryptocurrency;
- Have others advised you to buy this cryptocurrency;
- Was the market bullish or bearish during the buy and sell;
While reading this list, you may notice that you can go very far with keeping information. From number 11 and onwards you go deeper into the investment you have made.
Try to determine for yourself what information is useful for you to keep track of. You can find out by playing with the trading journal. Keep track of different information and see over time which information you have had a lot of. This makes it easier and easier to keep the right information that you can ultimately do something with.
Are you using an Excel file? Or from a Word file? Then create a table in which you will store this information.
Step 3: Write everything down when you make a trade #
The moment you start to buy or sell a cryptocurrency, grab your trading journal. Then enter all the necessary information. Make sure you don’t miss anything, because in the end you will benefit a lot if you keep entering the same data consistently. This makes it easier to find connections between different investments.
It is important that you do this for all transactions. Ultimately, you want to evaluate the transactions in order to draw conclusions. This will only work if you have as much information as possible at your disposal.
Step 4: Evaluate your trading journal every week #
Decide for yourself on which day you perform an evaluation every week. Many traders do this at the end of the week, on a Friday or Sunday. During the evaluation, you grab your trading journal and check how your trades are doing. Has an investment achieved its intended purpose? Or has a stop-loss limit been reached? Then you act on this basis and write down which actions you have taken.
Step 5: Learn from your mistakes by writing them down #
Over time, it becomes easier to make connections. This way you can see where things often go wrong or right. Based on this research, you can learn lessons and become a better and better trader.
Just a few examples to make it clear.
- Do you mainly lose money when you invest in cryptocurrencies that other people recommend? Then the lesson could be to do your own research into cryptos.
- Do you make a lot of money with projects that fall within the metaverse sector? Then the lesson could be that this is where your specialty lies and it is therefore best to continue within this niche.
- Do you mainly lose money when you invest on days when you are under a lot of stress and busy? Then the lesson could be that you can invest better when you have more peace of mind and are relaxed.
- Do you make a lot of money when you invest in times of bull markets? Then the lesson could be that in the future it is better not to invest in times of a bear market.
Finding these patterns will only work if you keep a trading journal for a longer period of time. So don’t jump to conclusions immediately after the first week, but wait a few months. This way you ensure that the outcome is reliable.
Step 6: Look at your lessons before making a new trade #
Are you planning to buy or sell a cryptocurrency? Then read through the list of all lessons before you actually execute the transaction.
We often think that this is not necessary because we do remember the lessons. However, it turns out that this often doesn’t work in practice, and crypto traders make the same mistakes over and over again when they don’t write them down and read them through before making a new transaction.
A crypto trading journal is an indispensable tool for anyone who wants to achieve success within the crypto world. In such a trade journal you keep all the important information about a trade that you execute. Why? To learn from the mistakes and successes you achieve. When you do something successfully, you can do it again in the future. And does something go wrong? Then you can make sure you don’t make this mistake again in the future.
What such a trading journal looks like is entirely up to you. We have given you several practical tips in this article about where you can keep a trading journal and what information you can keep in it. It is especially important that you use a long-term trading journal and refer back to it regularly to learn from your mistakes and celebrate and repeat your successes.