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 hits two-day highs near 1.1820
EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.
GBP/USD reclaims 1.3600 and above
GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.
USD/JPY drops back below 157.00, as focus shifts to Japan snap election
USD/JPY is back in the red below 157.00 in the Asian session on Friday. The Japanese Yen recovers ground against the US Dollar amid some profit-taking ahead of Japan's snap general election on Sunday. The preliminary reading of the Michigan Consumer Sentiment Index report for February will be released later on Friday.
Editors’ Picks
EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates Premium
The EUR/USD pair lost additional ground in the first week of February, settling at around 1.1820. The reversal lost momentum after the pair peaked at 1.2082 in January, its highest since mid-2021.
Gold: Volatility persists in commodity space Premium
After losing more than 8% to end the previous week, Gold (XAU/USD) remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000.
GBP/USD: Pound Sterling tests key support ahead of a big week Premium
The Pound Sterling (GBP) changed course against the US Dollar (USD), with GBP/USD giving up nearly 200 pips in a dramatic correction.
Bitcoin: The worst may be behind us
Bitcoin (BTC) price recovers slightly, trading at $65,000 at the time of writing on Friday, after reaching a low of $60,000 during the early Asian trading session. The Crypto King remained under pressure so far this week, posting three consecutive weeks of losses exceeding 30%.
Three scenarios for Japanese Yen ahead of snap election Premium
The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.
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