Looking back on past occurrences is what is meant by the term retrospective.
It may be tempting to ring up your friends after trading to go to happy hour, indulge in Patrón shots, and buy expensive bottles of Dom Pérignon, but it’s important to reflect on your trade, whether you won or lost.
To determine what you did correctly and wrong, you should take a step back and review the entire procedure.
Here are some queries to consider:
How well did your Trade work out?
- Was the position size sufficient to match the risk and reward scenarios, or was it too large? Too small?
- Could you have entered at a better level?
- What tools might you have used to improve your entry timing?
- Were you patient enough or did you rush in thinking you’d never have a chance again?
- Was your take profit realistic or a pie in the sky?
- Did the market pay any respect to your choice of take-profit levels, such as stopping short of it, or did prices blow right through it?
- Did the market pay any respect to your choice of stop-loss levels, such as stopping short of it, or did prices blow right through it?
- What news or event catalysts caused the market to move the way it did?
Utilize the responses to improve future order placement, entry level, and position size.
How well did you manage the Trade after it was open?
- Were you able to effectively monitor the market while your trade was active? If so, how? If not, why not? The answers to these questions will reveal a lot about how much time and dedication you’re able to devote to your trading.
- Did you modify your trade plan along the way?
- Did you adjust your stop loss order to protect profits?
- Did you take partial profit at all?
- Did you close out your trade based on your trading plan, or did the market surprise you somehow?
Your responses will help you determine how disciplined of a trader you are and what influence your emotions may have played.
Even though you might wish to express your feelings to your friends, it’s best to put them in writing here.
In any case, you are probably boring them to death. They don’t want to listen to your complaints.
What can you improve and what specific steps will you take for improvement?
This is your chance to develop as a trader.
Don’t just jot down general confessions like “I need to be more disciplined,” “I need to hold onto my winners longer,” or “I need to cut my losses quicker.” By alone, these are completely useless.
Decide on SPECIFIC actions you’ll do to advance.
- How will hold your winners longer?
- Will you work on choosing a better profit target?
- Will you learn how to not freak out at the first sign of your unrealized profits falling?
In this evaluation procedure, there are no correct or incorrect responses.
Just be as honest as you can with yourself.
And be VERY CLEAR.
You won’t become a better forex trader if you don’t.
Did you execute your trade according to your trading plan?
TAKE THIS QUESTION SERIOUSLY.
If you aren’t consistently carrying out your trades in accordance with your strategy, either you seriously lack self-discipline, or there is an issue with your trading plan.
You have a BIG problem that needs to be solved immediately in any case!
Trading Performance Statistics
Keeping statistics is a terrific method to figure out what aspects of your trading strategy are preventing you from operating like a beautifully tuned race car rather than a junkyard clunker, even while your bottom line (total profit or loss) may easily tell you your overall trading performance.
Your “performance stats” assist you in identifying what’s working, what isn’t, and where you may make improvements.
Here are certain statistics you should at the very least keep to monitor the health of your system.
Net Profit
Your overall gain less any losses and expenses equals your net profit. These charges include the price of the equipment, commissions, and additional expenses. In essence, this is the amount that your account is up or down at any particular time less trading expenses.
Win % and Loss %
The total number of victories divided by the total number of deals is known as the win percentage. What percentage of trades do you win?
The total number of losses divided by the total number of deals is the loss percentage. What percentage of trades do you lose?
Largest Winning and Losing Trade
Your “average loss” estimate will not include your worst trade.
It is not required to do this, but if you do have a loss that is disproportionately huge to your previous losses, removing it will give your data a more true look and set of expectations.
By dividing the total profit from all of your winning trades by the total number of winning transactions, you can get the average profit per winning trade.
Average Winning and Losing Trade
By dividing the total profit from all of your winning trades by the total number of winning transactions, you can get the average profit per winning trade.
Your total loss from all of your losing transactions divided by the total number of losing trades gives you the average loss per losing trade.
Payoff Ratio per Trade
The payoff ratio per trade is your average winning trade minus your average losing trade.
Average Holding Time per Trade
The average holding time per trade is calculated by dividing your total holding time for all your trades by the number of trades.
P/L of Long Trades vs P/L of Short Trades
This stat helps determine what types of trades or trading environments you perform well in.
Largest # of Consecutive Losses
This stat helps in determining your max drawdown, or the worse possible scenario you have experienced so far.
Average # of Consecutive Losses
This stat helps in determining your average drawdown and controlling your potential max risk.
Maximum Drawdown
The maximum drawdown is the worst period of “peak to valley’” performance of your trading system.
Trading Expectancy
In simple terms, expectancy is the average amount you can expect to win (or lose) per trade.
This can be computed by multiplying the loss percentage by the average loss and subtracting it from the win percentage times the average win. This stat helps you determine the correct position size and how profitable your trading method is.
Tracking Feelings and Mistakes
Your mental state can’t exactly be tracked as a “statistic” but you should record it nonetheless.
Keeping track of how you feel will help you avoid trading during those frustrating times–like when you wake up right after a news event (that you forgot about), and it pushes the markets fast, so you try to chase it.
But then your computer crashes, you lose power, and your dog goes running out of the house into oncoming traffic.
By the time you get back online you see the market has moved 100 pips in the direction you wanted to buy. Don’t you hate it when that happens?
You’re probably not in a good mood by then, so trading for the rest of the day may be a bad idea.
The ideal situation would be for you to maintain track of these figures in order to compare and evaluate your performance over a predetermined period of time.
For instance, Huck publishes her year-end trading review at the end of the year.
She examined her trades and discovered that she had been inadvertently trading against the trend.
With this knowledge, she can modify her trade to avoid trading against the trend, which should result in improved trading results.
Finding strategies to increase your expectation (pips or dollars gained each trade), select the proper position size every transaction, and ascertain the trading conditions most suitable for YOU should be the objectives of gathering and calculating these stats.
