If you are new to trading, there are a few simple rules you can follow that will greatly increase the likelihood of surviving and succeeding. One of these is daily trade reviews. It is a simple habit that assists a lot of winning traders in their long term success. Reflecting on your day’s trades not only allows you to assess your adherence to your trading plan but also provides invaluable insights for improvement.
What is the benefit of daily trading reviews?
A daily self-review of your performance allows you to critique your ability to follow your trading plan and discipline in trades. It identifies the areas you are most disciplined, along with your problem areas. It allows you to learn from your mistakes, and not fall into a pattern of bad behavior.
Take the scenario where a trader finishes the day with an overall loss. He could put his losses down to a bad day and move on without taking a deep dive into what went wrong. While it may be the case that his losses were due to bad luck, or the markets, his losses could also be caused by something within his control. Without regular reviews, he will never identify his problem areas and fix them.
Say that same trader starts reviewing his trades every day. He may notice that on days he lost money, his trades did not follow his trading plan rules.
Automated Daily Reviews in Performance Analytics
In the Performance Analytics tab, you can see which trades broke which rule in the plan, and what those trades made or cost you.
For example, if a trader identified that a percentage of his trades were executed and allowed to lose more than the acceptable loss, and he lost money on the trades he closed in a losing streak. If he continued with his daily reviews for the rest of that week and identified similar losses each day when he broke his losing streak limit. This could alert him to a major problem area in his trading, that he could then focus on remedying.
By reviewing his own trading day, this trader identified correlation between undisciplined trades and losing money and pinpointed exactly where his weak area was. This meant he was able to manage his losses more effectively.
Conclusion
The practice of daily reviews establishes a solid foundation for a trader’s journey. By evaluating your trading performance, identifying areas for enhancement, and learning from both wins and losses, you can refine your strategies and bolster your trading discipline. Embrace the power of daily reviews to elevate your trading habits and set yourself up for long term success.
–By FOREX.com team
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