There are many simple and easy to use tips that can help traders increase their profits in forex trading. One of these simple tips that you can use to maximize your profits from your trading strategy is keeping track of your trades. (Yes that simple!)
The majority of traders understand that having a trading strategy is important if someone wants to make money in forex market, but only a small percent of them keeping track of their trades. The reason is that when someone starts out he/she believes that it will be easy to remember all his/her trades. In reality, in a week of trading regardless if using a forex demo account or a real account, most traders cannot even remember the half of their trades. Usually significally winning and losing trades stand out but the majority of small trades that are normally the backbone of a trader’s trading activity quickly fade into a blur even though the success or failure of a trader depends on these small trades in the long run.
When you make profits and everything seems to going well, you can easily fall into a false sense of security and believe that there is no need for any work other than following your system’s rules and placing trades when these rules dictate it. But there are times when things do not go so well and you feel that something has suddenly change and you hit a losing streak (this happen even to the best and most experienced traders), this will make you lose your confidence and have questions like:
- Was it a fault of your forex trading strategy?
- Was it the way you implemented the system?
- Was it an extraordinary occasion that led the market against your trades?
- Did you overtrade due to over confidence?
- Or is it just a question of statistics, ironing out the better than estimated results that you had within the last few months?
If you do not have a record of your trades to analyze you cannot answer these questions. Therefore, it will be impossible to tell if you should continue trade with the current trading strategy or if you should make changes to it.
Keeping records can be something very quick and simple. You can use a notebook or even an Excel spreadsheet and just write down the basic data of every trade you make. This means that you should note the entry level, profit target, stop loss, exit level and the actual loss or profit. If you want to make it a little more analytical you could note for every trade if you deviate from your trading strategy in any way and write down the effect that this had in your results.
If you want to take full advantage of the data that you gathered you could analyze them every week at the weekend and compare them with the data of previous weeks. Regardless of how experienced you might be as a forex trader, you will certainly learn something nearly every week you follow this advice and additionally you will become more confident the next time you start trading forex.