Trading can be complicated, but there are simple steps you can take to make the process a lot simpler. One of the most important of these is the routine reflection of your trades – and, luckily, it is also one of the easiest. Today’s market moves quickly, and by taking time to analyze and review both your successful and unsuccessful trades, you are maintaining your knowledge of the industry even in the face of constantly evolving trade algorithms.
This article will explore why reflecting on your trades is important, and what you should look for when analyzing them.
What Is Trade Reflection?
Reflecting on trades refers to the activity of thinking about your trades and examining key elements, which we will detail a bit later. If you have ever thought about an event or situation and how it impacted your behavior, you are already familiar with the concept. When you reflect on your trades, you consider your decisions and the results and look for anything you could have done differently to make the trade even just a bit more successful.
Don’t worry if you are not able to glean much from every single trade. Sometimes, even minor improvement can snowball into major progress.
Benefits of Reflecting on Trades
The benefits of reflecting on trades are fairly easy to understand. Routinely examining how your decisions are impacting your portfolio can help you identify strengths and weaknesses in order to play to your strengths. It can also help you recognize trends in your investing, both the positive and the potentially detrimental. This is also a great way to analyze profitably per currency if you trade in more than one.
Here are some more specific advantages that traders who regularly analyze their trades have over those who do not.
Improve Your Approach
Taking the time to analyze your decisions post-trade allows you to review the strategies you used and determine if they were the most effective. Sometimes, it can be difficult to find the perfect technique, but routinely analyzing your trades is a great way to improve. Note that it is important to analyze both your successes and your unsuccessful trades in order to improve as much as possible.
Analyze Your Emotions
Whenever we make big decisions, we go through a number of different emotions. This is especially true when money – something that is already steeped in stress for many – is involved, particularly in large amounts. Reflecting on your trades gives you the chance to recognize the emotions you felt making the trade and how they might have impacted your behavior. It is easy to second-guess ourselves at the last moment, but it is important to learn how to control that instinct. Becoming familiar with the emotions that surround making trades is a good way to learn how to push through them.
How to Reflect on Your Trades
Reflection is important, but many readers wonder how to do it properly. The truth is that it can be difficult when staring at raw data without much context. Finding the right platform from which to trade is a critical part of effective trade analyzation. A company such as Skilling broker is a great option for many traders. Its platform is designed to offer users a stripped-down experience free of niche jargon in favor of easy-to-understand explanations.
Another way to make reflection easy is to use a tool such as a journal. Record all transactions related to your trades in this journal, and include information such as the trade’s:
- Stop loss
- Profit target
Record additional comments you feel are important with the above information. If you are not keen on the idea of a physical journal, consider keeping a digital record instead. Include all of the aforementioned information.
How to Make Time for Reflection
Finding the time for routine reflection might be daunting, but it doesn’t have to be a struggle. One of the easiest ways to set time aside for analyzing your trades is to specify a period in your schedule dedicated to the activity. Many people include this time at the end of their workdays just as they might schedule anything else. The exact time of day is not important, but reflecting every day is. Even if you do not have new notable trades in your opinion, don’t skip this step. There is always something to be gleaned from examining your work.
Are you ready to improve your trading skills and boost your successes? Keep an eye on our website for more tips about building your career!