After a good number of trades, you will have collected a lot of fancy-schmancy data and observations on the market and yourself…how do you analyze it all??
It’s pretty simple:
- Find what works and keep doing it
- Find out what doesn’t work and stop doing it.
And finding what works and doesn’t work is all about keen observation and asking the right questions.
Refine your analysis of your trading results by breaking them down into smaller categories, such as day of the week or specific currency pairs .
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?
Questions like these can help you quickly filter out the actions that have kept you from making some pips.
In the beginning, the idea is to get to the point where you have figured out what works for you and to only do those things.
Once you have figured out those right things, the next step is to consistently practice those actions that work until it becomes a habit.
Finally, persistent journaling will help keep you on top of your performance and help you recognize when the markets change–and yes the markets are always changing.