Many traders struggle to make consistent profits and keep looking for another strategy, another course, another trading robot or anything that might improve their trading. They spend more time and money on strategies, eBooks, indicators and courses, whilst losing money in with their trading accounts.
The root of the problem never gets fixed. However there are steps that can be taken to improve trading and make it a more enjoyable stress-free experience.
Step 1: Record Your Trades
Whether you are trading on a simulator or already trading with real money: You must record your trade in a trading journal. Successful traders treat trading as a business and they keep track of what they are doing.
Just like any other business, if you are making
money, you want to know why you are making money and if you lose money in your business, you need to figure out why.
In trading it is essential to keep accurate records of all trades that you placed, whether you took them on paper during back-testing, in a simulator or live in your account. Information to record includes the date, instrument traded, entry price, stop loss, time, type of trade, exit price, profit/loss, strategy applied, and any other additional notes.
Step 2: Analyze Your Trades
You need to analyze the trades to see which trades are making you money and why you are losing money.
Analysis may include:
Step 3: Modify Your Trading Plan
If necessary, based on the analysis you did in Step 2, make adjustments to your trading plan.
As an example, if you make money during the morning session, but you lose money in the afternoon, just focus on trading in the morning. If you make money Tuesdays, Wednesdays and Thursdays, but you lose money on Fridays, stop trading on Fridays.
If you make money with Trading Strategy #1 and Trading Strategy #2, but you lose money with Trading Strategy #3, stop trading strategy #3. Focus more on doing the things which bring positive results.
Disclaimer – Futures, CFD, Margined Foreign Exchange trading, Warrants, Options and Spread Betting all carry a high level of risk to your capital. Only speculate with money you can afford to lose. Futures, CFD, Margined Foreign Exchange trading and Spread Betting may not be suitable for all customers, therefore ensure you fully understand the risks involved and seek independent financial advice if necessary.
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