Friday, March 27, 2015

Evaluating Your Trading Results

Regardless of the outcome of any trade, you want to look back
over the whole process to understand what you did right and
wrong. In particular, ask yourself the following questions

How did you identify the trade opportunity? 
 Was it
based on technical analysis, a fundamental view, or some
combination of the two? Looking at your trade this way
helps identify your strengths and weaknesses as either a
fundamental or technical trader. For example, if technical
analysis generates more of your winning trades, you’ll
probably want to devote more energy to that approach.
How well did your trade plan work out? 
Was the position
size sufficient to match the risk and reward scenarios,
or was it too large or 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 the chance
again? Was your take profit realistic or pie in the sky? Did
the market pay any respect to your choice of take-profit
levels, or did prices blow right through it? Ask yourself
the same questions about your stop-loss level. Use the
answers to refine your position size, entry level, and
order placement going forward
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 those questions 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 stop-loss orders to protect profits? Did you
take partial profit at all? Did you close out the trade
based on your trading plan, or did the market surprise
you somehow? Based on your answers, you’ll learn what
role your emotions may have played and how disciplined
a trader you are
There are no right and wrong answers in this review process;
just be as honest with yourself as you can be. No one else will
ever know your answers, and you have everything to gain by
identifying what you’re good at, what you’re not so good at,
and how you as a currency trader should best approach the
market.
Currency trading is all about getting out of it what you put
into it. Evaluating your trading results on a regular basis is an
essential step in improving your trading skills, refining your
trading styles, maximizing your trading strengths, and minimizing
your trading weaknesses.

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