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 extends its optimism past 1.1900
EUR/USD retains a firm underlying bid, surpassing the 1.1900 mark as the NA session draws to a close on Monday. The pair’s persistent uptrend comes as the US Dollar remains on the defensive, with traders staying cautious ahead of upcoming US NFP prints and CPI data.
GBP/USD hits three-day peaks, targets 1.3700
GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.
USD/JPY bounces off lows, back above 156.00
USD/JPY is starting the week markedly on the defensive, sliding back toward the 155.50 area where it has met some decent contention for now. The move lower in spot follows FX intervention chatter after PM S. Takaichi scored a landslide win in Sunday’s election..
Editors’ Picks
AUD/USD gets ready to punch through 0.7100
The intense sell-off in the Greenback underpins the solid performance of the Aussie Dollar on Monday, motivating AUD/USD to add to recent gains while challenging the key 0.7100 barrier, or fresh YTD highs, at the same time.
EUR/USD extends its optimism past 1.1900
EUR/USD retains a firm underlying bid, surpassing the 1.1900 mark as the NA session draws to a close on Monday. The pair’s persistent uptrend comes as the US Dollar remains on the defensive, with traders staying cautious ahead of upcoming US NFP prints and CPI data.
Gold picks up pace, retargets $5,100
Gold gathers fresh steam, challenging daily highs en route to the $5,100 mark per troy ounce in the latter part of Monday’s session. The precious metal finds support from fresh signs of continued buying by the PBoC, while expectations that the Fed could lean more dovish also collaborate with the uptick.
XRP struggles around $1.40 despite institutional inflows
Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.
Japanese PM Takaichi nabs unprecedented victory – US data eyed this week
I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.
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