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Currency Trading Training : Tracking Your Trades

By James Roshwood

Republish: EasyPublish™ Published: 21Dec2009 Word count: 609 Viewed: 172 time(s) Get Free Content For Your Site

One of the most important steps in currency trading training is how to apply a successful trading plan by tracking your trades. Applying your plan correctly is very important if you are going to maximize your profits, and very often it makes the difference between profit and loss in the long term. Tracking is a vital part of this process.

Many beginners think that they will remember their successes and failures. In fact, it is only the most memorable that stick in our minds. Record keeping is not sexy and at first glance you might not think it is a profitable use of your time. But in fact it is the easily forgotten average trades with their small gains and losses that will determine whether your system is successful in the long run.

Some traders start out with good intentions of recording their successes and failures but quickly lose interest. You may need a large number of trades to build up in either a demo or a real account before you can learn anything useful from your records, so it is hard to keep the motivation going.

In particular, if things are going well, you may think there is no need to keep a record because your system is perfect. But no system is perfect and sooner or later it will go through a bad patch. At that time you will desperately need an accurate record of your trades so that you can see what went wrong. Is it just the kind of blip you can statistically expect, or did you inadvertently start doing something differently that might have thrown the system out? Without records you will have no way of knowing, so if there is a problem, you cannot correct it.

Your forex trading records do not need to be complicated. All you need is a note of each trade that you make. You will need the opening and closing prices, the stop loss that you set, your profit target and your actual profit or loss. It often helps to add comments such as why you opened the trade (the signal that you acted on) and anything that you did that was different from your trading plan, e.g. Opening or closing earlier or later than your system proposes.

You could just write this down in a notebook, but most traders use excel or a similar spreadsheet. This makes it easy to analyze the trades to work out figures such as your average profit or loss per trade, your profit or loss over time or over a certain number of trades, and other statistics that may be useful if you find at a later stage that you need to make changes to the system. Take a few minutes at the weekend to look through your records for the past week and you might notice some interesting and profitable trends.

You will need a different record for each system that you follow, so that the results of individual systems are not hidden in the average. For example, you might be operating three systems and be making regular profits. Sounds like a good situation. But if you separate out the three systems, you could find that one is very successful, another is relatively successful and the third is actually making a loss. You could increase your profits by cutting out that third system. But you will not know this if you record them all mixed together.

So go ahead and set up separate spreadsheets for each of your systems now, and have them open on your computer whenever you are trading, to make best use of your currency trading training.

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