Forex Trading Log

Why you need to maintain a trading log? Over the years, a forex trader places a lot of trades. Some of the trades make huge profits,some make a bit lower profit and the rest end in the loss. All the traders try hard to increase their profits. There are two ways to do that:

1. You place more trades. This can be done by more chart monitoring or buying some advance trading system or some other form. But this method will surely require investment. The investment can be in form of money if you buy an advanced trading system or it can be less amount of rest if you decide to monitor the charts more.

2. Reducing the % of trades where you end up making losses.

And it is the 2nd method which requires no investment at all. I am sure you are thinking, how you can reduce the losing trades with no cost.Remember, I have told you to maintain a trading log that will keep track of all the trades that you make? Well, it is a time to lookback at it and review the trades that you have placed over the months and years. Here is what you should do:

1. If your log has more than 20 trades, select any 12 trades. Why 12? Because this shortlist should consist of 10 trades that had losses and 2 winning trades. But make sure, all these 12 trades should be at least a month old.

2. Start going through the 10 trades that had losses and spend 4-5 min. on trade to understand what you didn't do right and also ask yourself what you would do if a similar trade setup forms again.

3. Once those 10 trades are done, open the 2 winning trades and understand if the decision you took was right and if there is anything you would like to improve in such trades.

This entire exercise will take just hour or a bit more. But by the time you will complete such analysis, you'll see a significant improvement in your trading and also your confidence will improve tremendously. So, it is a simple exercise and is free of cost(May be not entirely free, since you are putting 1 hr. So, go ahead and look back at the trades you have made. But, if you are not maintaining a trading log, then please start doing it from now on.

There are two approaches to forex trading or for that matter any trading: Discrete and Mechanical. In discrete trading you have in fact no method or system. Every time you make a new decision how you are going to enter and exit. Most of the new traders try to use the discrete trading method. What you need to do is to develop your own mechanical trading system like the professional traders.

Mechanical means it is rule based and the system will tell you if it is a good time to enter a trade or not. Maintaining a trading log is important for you because you need to keep a history of how your trading system had performed over time. What is its overall winning ratio? This ratio is very important for you to calculate and you can only do so by keeping a trading log of each trade so that you can calculate it. If you have the winning ratio, you can then calculate the trade size for each trade. It is essential for you to know the history and performance of your trading system.So start keeping a trading log.