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
AUD/USD: A tough barrier remains around 0.6800
AUD/USD failed to maintain the earlier surpass of the 0.6800 barrier, eventually succumbing to the late rebound in the Greenback following the Fed’s decision to lower its interest rates by50 bps.
EUR/USD still targets the 2024 peaks around 1.1200
EUR/USD added to Tuesday’s losses after the post-FOMC rebound in the US Dollar prompted the pair to give away earlier gains to three-week highs in the 1.1185-1.1190 band.
Gold surrenders gains and drops to weekly lows near $2,550
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Australian Unemployment Rate expected to hold steady at 4.2% in August
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Ethereum (ETH) is trading above $2,330 on Wednesday as the market is recovering following the Federal Reserve's (Fed) decision to cut interest rates by 50 basis points. Meanwhile, Ethereum exchange-traded funds (ETF) recorded $15.1 million in outflows.
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