How to collect your statistical data, and monitor its performance: trader’s diary
Every trader loves cryptocurrencies for quick results. Speaking about huge profits in cryptocurrency trading, they don’t mention that it rarely happens. You have to struggle with an “investor” for a long time.
In previous blogposts we have discussed how to make cryptotrading systematic, predictable, and profitable. Moreover, we’ve discussed how to stop being near the same mark, and increase your profit.
What do you need for systematic trading:
- A market map which shows entry and exit points;
- Risk management calculator;
- Ideas on the transaction volume: the 2% rule will be enough;
- Willpower, in order to follow all mentioned above;
- The trader’s diary is a personal data. Only it has a right to change your trading plan. Only with its help you will be able to test hypotheses, and to estimate the results objectively. It will be your mentor and teacher, it will control you how do you understand the market, and it will tell you whether your strategy is adequate or not.
Trading diary: what is it?
Trading diary is a table in excel with all your data: each transaction on the exchange. Each trader fulfills it according to the strategy.
The basic diary consists of:
- Date and time of opening the transaction;
- Position size;
- The reason why you’ve opened the trade;
- following the trend, for example, due to the crossing the moving average;
- against the trend, for example, you’ve noticed a strong resistance level in the price path;
4. Date and time of closing the transaction;
5. Consistency of the transaction: “plus” if the transaction is made according to your trading plan, “minus” if the transaction is out of your system (1 and -1 for the table).
6. The reason why you’ve closed the transaction: stop loss, take profit, the appearance of the opposite signal or something else;
7. The result of the transaction is profit or loss;
8. Transaction analysis. What can you say after all? Maybe you’ve closed the deal too early, and the price moves in your direction, or the stop loss was placed close to the price, and was knocked out quickly.
Some traders add strategy columns (Long / Short), TakeProfit, StopLoss, commission size, and put the results separately: the number of total deals, how many of them are profitable, unprofitable or without a loss. Sometimes they add monthly averages: profit to loss ratio, the size of the average unprofitable and profitable transactions. We recommend you not to complicate it without any reason: while creating it, remember that the diary should help you to control your decisions, not disturb you.
We recommend you to split bots and smart trades statistics. This will show your strength and weakness, and you will see in numbers your results: strategy or tactics.
It may be surprising: for example, that you make decisions opposite to your own strategy. This is a very valuable discovery: you can draw conclusions and take action. For example, transfer more trades to bots, or leave everything as it is but reduce the volume of the transaction in order to calm yourself down.
How to implement it?
It is important to check information. We offer a small experiment:
- Try to keep a diary of trading for some time;
- After this, analyze your transactions;
- Based on analysis of your results, make your own hypothesis, find a way to improve your results;
- Test the hypothesis using the following transactions, also, put them in the diary;
- Compare your results, and make changes if it is necessary.
Make decisions based on the strategy, honest analysis and experience, and may the profit be with you👾.
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