Keeping a Trading Journal Simple: Difference between revisions

Latest revision as of 12:01, 19 October 2025

Keeping a Trading Journal Simple: Spot and Futures Integration

This guide is for beginners looking to start trading crypto by keeping a simple, actionable trading journal. The goal is not to record every tick, but to document decisions, check risk adherence, and learn from simple setups involving your existing Spot market holdings and introductory use of Futures contracts. The key takeaway is consistency: document why you entered, what risk you accepted, and what the outcome was, regardless of profit or loss.

Balancing Spot Holdings with Simple Futures Hedges

Many beginners start by simply buying assets in the Spot market. When you move to futures, the first practical step is not aggressive speculation, but using futures to protect—or hedge—your existing spot holdings. This helps manage volatility while you learn the mechanics of leverage and margin.

Partial Hedging Strategy

A Partial Hedging for Spot Protection strategy involves using a short Futures contract to offset only a portion of the risk in your long spot position. This limits downside exposure without completely locking in your potential gains if the price moves up.

1. **Assess Spot Position:** Determine the value of the asset you hold (e.g., 1 BTC held in your wallet). 2. **Calculate Hedge Size:** Decide what percentage of that risk you want to cover. For a beginner, 25% or 50% is a conservative starting point. 3. **Execute the Hedge:** If you hold 1 BTC spot, and you want a 50% hedge, you would open a short futures position equivalent to 0.5 BTC. 4. **Journal Entry Focus:** Note the percentage hedged and why. This helps you track how your overall position behaves. This concept is central to Spot Holdings Versus Futures Positions.

Setting Risk Limits and Stop Losses

When using futures, even for hedging, you must understand Understanding Liquidation Price. Leverage amplifies both gains and losses.

Always define a maximum acceptable loss (in USD or percentage) before entering any trade.
Use stop-loss orders on your futures positions. This is crucial for protecting your margin and avoiding catastrophic loss. Think of this as part of your First Futures Trade Setup Checklist.
Keep leverage low initially. Refer to Setting Conservative Leverage Caps for guidance.

Using Basic Indicators for Timing Entries and Exits

Indicators help provide context for your decisions, but they are tools, not crystal balls. When combining spot purchases with futures hedges, indicators can signal when to adjust the hedge or when to enter a new spot trade using the principles of Scaling Into a New Spot Position.

Relative Strength Index (RSI)

The RSI measures the speed and change of price movements.

**Context:** Readings above 70 often suggest an asset is overbought, while below 30 suggests oversold conditions.
**Caveat:** In strong trends, the RSI can stay overbought or oversold for extended periods. Always check RSI Overbought Levels Caveats.
**Journal Note:** If you are holding spot and the RSI is extremely high, you might consider initiating a small short hedge to capture a potential pullback.

Moving Average Convergence Divergence (MACD)

The MACD helps identify momentum shifts.

**Crossovers:** A bullish crossover (MACD line crossing above the signal line) can suggest increasing upward momentum, potentially signaling a good time to *reduce* a short hedge or initiate a spot buy.
**Lag:** Be aware that the MACD is a lagging indicator; its signals often confirm a move already underway. This lag is common in many momentum tools, including How to Use the Commodity Channel Index for Futures Trading Strategies.

Bollinger Bands

Bollinger Bands display volatility. They consist of a middle moving average and upper/lower bands that widen when volatility increases and narrow when it decreases.

**Interpretation:** Price touching the upper band suggests relative strength, while touching the lower band suggests relative weakness.
**Confluence:** Use band touches alongside RSI readings. A touch of the lower band combined with an RSI below 30 offers stronger confluence than either signal alone.

Trading Psychology Pitfalls and Risk Management Notes

Your journal must track your emotional state as much as your trade metrics. Beginners often fall prey to predictable behavioral errors, which are detailed in Psychology Pitfalls for Beginners.

Common Pitfalls to Journal

**Fear of Missing Out (FOMO):** Entering a trade late because the price has already moved significantly, often leading to poor entry prices.
**Revenge Trading:** Increasing position size or taking on excessive risk immediately after a loss to "win back" the money. This directly violates Revisiting Stop Loss Placement.
**Over-Leverage:** Using too much margin on Futures contracts, which drastically lowers your Understanding Liquidation Price and increases the chance of margin calls.

Essential Risk Notes to Track

Remember that every trade involves costs and uncertainties:

1. **Fees and Slippage:** Document the total fees paid. High-frequency trading or large orders that significantly move the Spot Market Order Book Depth can suffer from Slippage Impact on Small Trades. 2. **Funding Rate:** If holding futures positions open for extended periods, track the Managing Funding Rate Costs. This is a key difference between spot and futures trading. 3. **Correlation:** Understand the Correlation Between Spot and Futures. While they usually track closely, divergence can occur, leading to Basis Risk in Futures Hedging if you are hedging specific spot assets.

Practical Examples for Sizing and Risk/Reward

A simple journal entry should focus on the expected risk versus the potential reward. This helps enforce discipline in Analyzing Trade Size Allocation.

Imagine you hold $1000 worth of Asset X on the Spot market. You are worried about a short-term drop but want to keep most of your upside potential.

**Goal:** Hedge 40% of the $1000 spot holding (i.e., hedge $400 worth of Asset X).
**Entry:** Current price is $100 per coin. You short 4 contracts (if each contract represents 1 coin).
**Risk Defined:** You set a stop loss on your short futures position $5 above your entry, risking $20 (4 coins * $5 move).
**Reward Target:** You target a $10 drop in price, aiming for $40 profit on the hedge to offset a $40 loss in your spot position.

This scenario helps illustrate the mechanics. Remember to check your Understanding Initial Margin Requirements before executing the futures trade. Effective risk management, even when trading late, such as during Night Trading in Cryptocurrency Futures, relies on these pre-defined parameters.

Metric	Value (Example)
Spot Holding Value	$1000
Hedge Percentage	40% ($400 exposure)
Max Risk on Hedge	$20
Target Reward on Hedge	$40
Leverage Used (Example)	5x (Must be conservative)

Always review past entries to see if you adhered to your planned leverage and stop-loss placement. If you consistently exceed your planned risk, your journal is flagging a psychological issue, not a market issue. Reviewing specific asset analysis, like Analyse du Trading de Futures BTC/USDT - 13 08 2025, can sometimes show how professional traders manage these variables, but always adapt to your own risk tolerance and Understanding Wallet Security practices.

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