You will have amassed a ton of sophisticated information and insights about the market and yourself after making a good number of trades.How do you evaluate everything?
It’s quite easy:
- Find what works and keep doing it
- Find out what doesn’t work and stop doing it.
And discerning what works and what doesn’t requires careful observation and the correct questions.
By segmenting your study of your trading outcomes into more manageable groups, such as days of the week or particular currency pairs, you can make it more precise.
Here’s a sample of the types of questions you should be asking yourself when you review your journal:
- Which chart patterns or technical indicators work out best for you? Which do not?
- How can you adjust your indicators to get you in trades earlier, or help you avoid whipsaws and fakeouts?
- Are you closing winning trades too early? Is it that you need to adjust your profit targets or are you afraid of losing your unrealized gains?
- Do you hold onto losing trades longer than you should? How can you improve your stop-loss processes?
- How often do you follow your trading plans? Of the ones you do follow, have you been profitable?
- What trade setup did you miss, or not take, and why? Was it a legitimate signal or setup according to my method or system?
- What could you have done differently to make prevent/reduce this loss or maximize your gain?
- Are you winning more on trades with multiple lots or single lots?
- What kind of market environments have you been doing well in? Trending or ranging?
- Were most of your wins or losses biased towards certain currency pairs?
- Which news events have brought on the kind of volatility you were looking to trade or avoid?
- Which trading sessions have been the most favorable to your trading style?
- Are you losing trades concentrated on certain days of the week, such as Mondays and Fridays?
These types of queries can help you rapidly identify the behaviors that have prevented you from making any pip.
It is initially intended for you to identify what is effective for you and to stick to it.
Once you have identified what is best, the following stage is to repeatedly practice the strategies until they become second nature.
Last but not least, consistent journaling can help you stay on top of your performance and assist you spot market changes—because markets do fluctuate, after all.
Keeping A Trading Journal Is Hard But It’s Worth It
It’s difficult to keep a trade journal.
However, so are losing all of your trading money, failing as a forex trader, giving up, and never again engaging in forex trading.
And thinking back to happier times when there were just five TV channels to pick from in the good ol’ simpler days.
Which one would you choose to pick?
When you enter trades in a journal, you are compelled to do so rather than just remembering them, which is difficult for most people.
More significantly, a trading log enables a trader to take a step back and see their trades as a group of trades rather than as a series of isolated and ultimately random transactions.
Boy, does this sound like a lot of effort.
Yes, it is, but isn’t work necessary for anything worthwhile to be accomplished?
Keeping a trading journal is similar to practicing for a sport.
Professional athletes frequently devote much more time to practicing or training for an event than to actually competing in it.
