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How is your trading?
By Tom Long | March 12, 2008
Quick….how many of your trades in the last 10 have been winners? What was your average gain and your average loss? How long does your typical trade last? Did you use the same approach on all of those 10 trades? These are some of the questions you need to able to answer in order to move up to the next level of trading. Analyzing your past trades is as important as thinking about your next trade. Most new traders want to ignore the losing trades and not even look at them again, but you must in order to improve. If you won five of the last 10 trades, but were not profitable in the series, you need to lower your risk or look for more profit. If you used a couple of different strategies to find your entry and one was particularly profitable, you should do more testing with that strategy. But you cannot know these answers unless you keep track of what it is you are doing. Many successful traders keep a log of their trades and also note what they were thinking at the time. This way they can go back after a series of trades and see what worked and what didn’t work. Professionals have a good idea of what works for them since they have probably been doing the same thing for awhile, but do you? Try keeping a log and record as much information as you can about each trade including: date, time, entry, stop, profit target, exit, results, and any other piece of information you might find interesting. You should also write down why you entered into the trade and why you exited. This kind of information can take some time to write, but may be some of the most valuable information about how to improve your trading as you will ever read.
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