The Importance of Reviewing Your Trades
What broke a lot of bad habits I had in trading was knowing that after I exited a trade, I had to place the buys and sells and prices and times in a spreadsheet, and send them to my mentor. Then I had to pick up the phone and call him to review the trades with an eye on what I did right and what I overlooked. He saw my bad habits before I did. One time he said to me “Your a counter-trend trader”, as if it was an accusation. I had recorded a winner on the spreadsheet and he actually told me I should not have taken the trade, and wanted to know why I didn’t take the trend-trade before, and then again the trend-trade after? I also remember one trade where I made a hand full of ticks per, getting out with a small winner. He congratulated me on the perfect trade, and I was perplexed at this because I barely made car fare in for the day. He laughed and told me “Yeah, but your execution was perfect. Finally”.
I trusted his judgement completely, because for one, his services only cost me time, and two, he drove the biggest black Mercedes I’d ever seen. He took me under his wing because he has a genuine passion for trading and truly enjoyed passing on the lessons he’s learned. And like so many of the old timers in this business everything he taught me was done verbally.
I went down to visit him last month and asked how I could get my clients to recognize the importance of sticking to thier trading plans and sending me all thier trades in the spreadsheet, not just the winners. He told me: “That’s easy. If they don’t stick to thier plan, fire them”.
The point is if you are going to get to where you want to get as a trader you are going to have to be honest with yourself, and that means sticking to your trading plan, demo trading, and reviewing every trade you make, especially the losers, and putting them in a format that over time will give you you’re winning % and your risk/reward ratio. Otherwise you are going to have to fire yourself.
Jay Norris is the author of Mastering the Currency Market, McGraw-Hill, 2009, and a trading instructor at Trading-U.com. To sign up for free memebrship at Trading-U and hear of upcoming educational initiatives go to: Registration
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. Risks include the potential that changing political/economic conditions may substantially affect the price/liquidity of a currency. Investors may lose all or more than their original investments.