Some Forex traders tend to dwell on past trades and over analyze them, while others ignore past activity and are eager to make the next trade. Both approaches are not likely to improve your profitability.
The golden path is somewhere in the middle. What can you do to use previous trades usefully? Here are some ideas.
Forex trading, like anything in which you want to succeed, requires commitment. Casey Stubbs rightfully says that he “would rather work hard and be committed to achieve success then do things halfhearted with no commitment only to be broken hearted again and again by a string of successive failures.”
Indeed, if you are doing things without giving enough thought, you are only in for fun, games and… losses – practically planning to lose. Are you trading only for fun, or do you wish to see profits as well?
So, the other approach is to make serious analysis before each trade and then to evaluate yourself. That’s a great approach – trying to understand what happened. However, some traders dwell upon past trades too much: they either praise themselves and enjoy the glory of a winner, or enjoy the suffering, over and over again. And before the next trade, they are stuck in analysis paralysis.
Where is the middle? Basically, a fruitful analysis is one which results in action items - using the knowledge for the next trade.
Here are some questions you can ask yourself after a winning trade:
For a losing trade, here are potential questions:
Here is another question, which is always relevant: How was my emotional reaction during the trade? Is there some strength I should remember for the next trade, or should I try to improve my reactions?
Needless to say, the above questions were only a sample of potential questions for self-evaluation. They all have one thing in common: they are made for action items – they aren’t analysis for the sake of analysis.
Do you look at past trades? If so, how do you it?
The golden path is somewhere in the middle. What can you do to use previous trades usefully? Here are some ideas.
Forex trading, like anything in which you want to succeed, requires commitment. Casey Stubbs rightfully says that he “would rather work hard and be committed to achieve success then do things halfhearted with no commitment only to be broken hearted again and again by a string of successive failures.”
Indeed, if you are doing things without giving enough thought, you are only in for fun, games and… losses – practically planning to lose. Are you trading only for fun, or do you wish to see profits as well?
So, the other approach is to make serious analysis before each trade and then to evaluate yourself. That’s a great approach – trying to understand what happened. However, some traders dwell upon past trades too much: they either praise themselves and enjoy the glory of a winner, or enjoy the suffering, over and over again. And before the next trade, they are stuck in analysis paralysis.
Where is the middle? Basically, a fruitful analysis is one which results in action items - using the knowledge for the next trade.
Here are some questions you can ask yourself after a winning trade:
- How did I win this trade? Did I trade according to the plan, or did a change in plans make this a winner?
- If the plan was executed accurately and successfully, it’s important to remember exactly what I did and reuse these strengths next time.
- If the plan was altered, did it cause harm and minimize the profit? If so, remember not to repeat this change.
- If the plan was altered and turned the losing trade into a winner, should I incorporate this change into the plan?
For a losing trade, here are potential questions:
- How did I lose the trade?
- Should I have entered the trade at all? If not, try to find how not to enter similar trades in the future.
- Is it one of the trades that the system loses with a favorable risk / reward ratio? If the answer is yes, remember to accept losses.
- Did I change the plan, and this is what caused the loss? If so, remember not to change the plan.
- If the change in the plan minimized the loss, can it be incorporated in the plan?
Here is another question, which is always relevant: How was my emotional reaction during the trade? Is there some strength I should remember for the next trade, or should I try to improve my reactions?
Needless to say, the above questions were only a sample of potential questions for self-evaluation. They all have one thing in common: they are made for action items – they aren’t analysis for the sake of analysis.
Do you look at past trades? If so, how do you it?
Editors’ Picks
EUR/USD trims some losses, back to 1.1770
EUR/USD remains on the back foot on Thursday, managing to regain some composure and reclaim the 1.1770 region after bottoming out near 1.1740 earlier in the day. The pair’s daily retracement comes as the US Dollar extends its recovery, buoyed by another round of solid US data that has reinforced the Greenback’s underlying strength and kept buyers firmly in control.
GBP/USD bounces off monthly lows near 1.3430
GBP/USD is sliding in tandem with its risk-sensitive peers, drifting back towards the 1.3430 area, its lowest levels in the month. The move reflects a firmer Greenback, supported by another round of solid US data and a somewhat divided FOMC Minutes.
Japanese Yen hangs near one-week low vs. USD amid worries about Japan’s fiscal health
The USD/JPY pair gains positive traction for the second straight day – also marking the third day of a move up in the previous four – and climbs to over a one-week high, around the 155.35 area, on Thursday. Spot prices, however, retreat a few pips during the early European session and currently trade just above the 155.00 psychological mark, up nearly 0.20% for the day.
Editors’ Picks
EUR/USD trims some losses, back to 1.1770
EUR/USD remains on the back foot on Thursday, managing to regain some composure and reclaim the 1.1770 region after bottoming out near 1.1740 earlier in the day. The pair’s daily retracement comes as the US Dollar extends its recovery, buoyed by another round of solid US data that has reinforced the Greenback’s underlying strength and kept buyers firmly in control.
GBP/USD bounces off monthly lows near 1.3430
GBP/USD is sliding in tandem with its risk-sensitive peers, drifting back towards the 1.3430 area, its lowest levels in the month. The move reflects a firmer Greenback, supported by another round of solid US data and a somewhat divided FOMC Minutes.
Gold surrenders some gains, back below $5,000
Gold is giving away part of its earlier gains on Thursday, receding to the sub-$5,000 region per troy ounce. The precious metal is finding support from renewed geopolitical tensions in the Middle East and declining US Treasury yields across the curve in a context of further advance in the Greenback.
Ripple slips toward $1.40 despite SG-FORGE tapping protocol for EUR CoinVertible
XRP extends its decline, nearing $1.40 support, as risk appetite fades in the broader market. SG-FORGE’s EUR CoinVertible launches on the XRP Ledger, leveraging the blockchain’s scalability, speed, security, and decentralization.
Hawkish Fed minutes and a market finding its footing
It was green across the board for US Stock market indexes at the close on Wednesday, with most S&P 500 names ending higher, adding 38 points (0.6%) to 6,881 overall. At the GICS sector level, energy led gains, followed by technology and consumer discretionary, while utilities and real estate posted the largest losses.
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