One of the most powerful pieces of information you can use to evaluate your actions as a forex trader is a trading log. With each trade, you should keep track of your thoughts and actions so you can improve your approach to trading. Here are some of the popular entries in a trading log:
1. Date
2. Time
3. Entry price
4. Number of lots opened
5. Initial Protective Stop level
6. Reason for entering into the trade
7. Target price (if any)
8. Exit price
9. Reason for exiting out of the trade
10. Result
After you have logged at least 10 trades, you can go back to compare your thoughts to how the market reacted after your entry.
Some questions to ask yourself include:
1. How did the market trade after I entered into the trade?
2. If the trade was profitable, how far did the market move against me before reversing?
3. If the trade was a loss, how profitable did the trade become before reversing?
4. Where was my protective stop at the beginning of the trade and at the end of the trade?
5. What was the direction of the trend on the daily chart when I opened the trade?
6. If the trade was profitable, how much of the move did I catch?
7. How close was I to the ideal entry point of the move and how could I improve that?
8. Was there a news release or other factor in the move of the market after entry?
9. Could I have managed the trade better?
10. Was my position size good or does it need to be adjusted?
These are of course just some examples. With time, you may need to log more information or ask yourself tougher questions. But analyzing your actions is the best way to see if what you are doing needs to be improved or changed.
Certainly, your account balance from month to month lets you know if what you are doing makes sense, but getting better is the key to successful trading and keeping a log of your actions and thoughts is the best way to be able to accurately analyze your actions as a trader.
