What is a trading journal? And how to use one

Monitoring price changes using charts is one way to stay updated on the market trends. However, technical or fundamental analyses and tracking other market metrics are not the only means of becoming a successful trader. For example, a disciplined approach that includes maintaining a trading journal would protect you from making emotional decisions concerning your financial investments.

In this article, we will discuss the benefits of a trading journal and how to create and use it.

What is a trading journal?

A trading journal records your trades and their outcomes and gives a summary of your trading experience. However, it is not a brokerage account statement as one can find the reasons behind opting for or avoiding a trading strategy.

All successively executed trades are methodically planned, and a trading journal can be a record of the performance of each trading strategy. Regardless of how the market performs, you can adequately assess the potential of a particular trade using a trading journal.

Moreover, you don’t need to spend much to create a trading journal. Spreadsheets or Excel would suffice, and it would help you to become disciplined and follow consistent trading strategies. You should record trading entries in your journal if you can’t always stick to your trading strategy. You can figure out how to avoid responding the same way to comparable situations in future trades by noting when things go wrong and why they did so. Why is keeping a trading journal important? Keep reading to find out!

What are the benefits of a trading journal?

Keeping a trading journal provides many benefits, including helping you to evaluate the strengths and weaknesses of your trading strategy. It helps you make unbiased decisions. For example, one can decide if crypto derivatives best suit their portfolio or if one should start reinvesting crypto profits. The final decision is exclusive of errors in judgment and any irrational beliefs, which helps protect you against an unconscious influence on your investment objectives.

Keeping a trading log helps you stay on track with your trading strategy, whether you are a day trader or a swing trader. Becoming distracted by winnings while trading for real money happens easily. After a run of profitable transactions, you can start to use sloppy entry points or acquire more cryptocurrency than usual. A trading plan helps you stay on target and reduces your tendency to make rash, potentially risky trades.

Related: Cryptocurrency investment: The ultimate indicators for crypto trading

One can start trading in the productive zone if they keep track of their trading plans and develop confidence in their skills. Consulting a trading journal can be a tremendous motivator for traders to reflect on how well they have done, and having a successful track record is always a terrific confidence booster. On the other hand, unsuccessful traders can learn from their mistakes and transform unproductive trading strategies into profitable ones.

Furthermore, one can also take advantage of what is effective and shift their attention to the current performance by using their journal to track and implement reproducible patterns. This enables traders to generate a steady profit and prevents them from spending time and resources on unsuccessful ideas, eventually helping them to become profitable traders.

How to create a trading journal?

Any spreadsheet application like Microsoft Excel or Google Sheets in which you record your actual trades and a written document like Microsoft Word or Google Docs to add your thoughts can be used to create a trading journal. You can also start using a free trading journal template like the one prepared by Binance to distinguish between an avoidable and a profitable trading strategy.

Regardless of what template you are using, ensure that you have all the necessary columns related to each trade. Additionally, you may take screenshots of the trading charts you have followed and connect them to the…