As we inch ever closer to the end of the year, some of you may have inflated bank and MT4 accounts; while others may have a deflated wallet. Perhaps over the year, you gained a lot of experience trading the financial markets. For some of you, maybe looking and staring at the charts wasn’t really your cup of tea. This year filled with trials and tribulations trading the turbulent markets from home is something to look back on. If you succeeded this year, do you know how you succeeded? If you failed this year and are about to give up on trading, do you know where you went wrong? Do you know how you can improve on your trading ability? Well, regardless of which side of the fence you’re on, here is the SURE FIRE (100% GUARANTEED) method to improve your trading ability on the financial markets.
Before we get into the method on improving your trading skills, let me ask you a series of serious questions. Do you remember the best trade you had this year? Do you remember how you felt while executing that trade? Do you remember your reason for entry? Was it a new strategy you were testing out or an old one with a few tweaks?
Many of us don’t have a photographic memory. We won’t remember all the subtle details when we execute a trade. In the heat of excitement and anticipation, layered with a feeling of fear and anxiety, we lose our bearings. For many people trading the markets this very year, this was the case. Perhaps many of you were looking for an alternative source of income to supplement your lifestyle given the current economic circumstances brought upon by the COVID-19 pandemic.
Whether you are an experienced trader, who has been trading for 4 years, or you’re a newbie who just started trading yesterday. Here is the best and proven method to trading, having a TRADING JOURNAL. A trading journal is like a diary. If you haven’t written a diary before, here’s your place to start. In your trading journal you will write everything. When I say “write everything”, I literally mean WRITE EVERYTHING. It sounds tedious, but this will give you a better insight into your own trading style and psychology.
Think of it this way. How are you going to improve if you don’t know where exactly you’re going wrong? No method or strategy is 100% fool proof. You may hear successful traders telling you that “this is the best strategy there is on the market”. However, the reality is while that strategy may work for others, it may not work for you. The same goes towards following signals. While the signals may end up working for others, it may not work for you. The problem could lay in the timing of when the signal provider created the signal and when you received it. Perhaps there were some conditions you were unaware of and while it led the signal provider to a profit, it led you to a loss.
Now, if you’re completely new to trading and want to learn some basic methods of identifying what is going on in the market, please check out one of our previous articles by clicking on this article: Top 10 Trading Techniques – Tips and Tricks to go from being broke to trading like a PRO. This may serve you well in starting out. For those who already know how to trade and use different indicators and different methods of mapping out a chart, then it’s finally time to move on to the next step.
STARTING A TRADING JOURNAL
Some of you may have come across or heard of a “trading journal”. For those of you who haven’t, a trading journal is like a diary that entails everything about a trade. A basic journal entry will have the basic details of your position. For instances, you’ll have the time, date, instrument, size, execution price, buy or sell, closing price and remarks. While you may be able to find these details in your MT4 history, the special part of this simple formula is the “remarks” section. This section is where you could jot down any notes pertaining to that particular trade.
Trading journals can get even more complicated, all the way down to the minute details. In addition to the basic categories, you would list down, you may add on items such as how long you held a position for, how you felt during the trade, did you make any modifications to the trade, reasons for entering the trade, and a lot more. The more questions you ask and answer regarding your trade, the more information you will have when you look back on it. For example, perhaps on one trade, you modified the Take Profit or Stop Loss due to greed or anxiety that you felt, and that caused the position to end in a loss.
Another example that you may want to consider is the duration that you held a position. The market takes time to move. Sometimes prices move fast due to high volatility, other times it can be extremely slow. Regardless of whether you’re a scalper or swing trader, sometimes you may feel the need to cut your losses early or take whatever minimal profits you can gain. Time takes a toll on emotions and a trader’s psyche, so don’t underestimate it and take it into account. Write down why you closed a position early, or held onto a position.
Being able to identify problems with your trading will help you improve in the long run. It will be times like this, towards the end of the year where you can reflect back on your mistakes to make an improvement. Then, perhaps that new years resolution of yours “to become a profitable trader” can be realized this coming 2021. Until then, I wish you all good luck and happy trading!
EXAMPLE OF TRADING JOURNAL ENTRY
|November 9, 2020
|Actual Closing Price:
|Reason for Entry:
|– Uptrend according to structure and EMA 200
– Price reached bottom trend line
– Price reaches Fibonacci retracement 618 at 135.975
– Support close to Fibonacci level and intersects with bottom trend line
– Stop loss set 10 pips before previous low
Risk to reward – 1:3
|Emotions and Thoughts:
|After setting the buy limit for the trade, I was anxious waiting for the order to execute. It executed 30 minutes later, then went in a favourable direction before hitting my TP. Felt calm on its way up.