How I review my trades!!!
Reviewing the trades you take (especially, the losing trades) to find where you are missing the dots is the best thing you can do in your trading, which we already know. But how to do that review is the question that has to be answered. Each one of us has a different procedure to review the trades. Trust me, most of the technical issues about trading is learnt by reviewing after hours, not in real-time markets. You will learn a lot of psychological things in real-time, but you, as a trader, has a great advantage of learning technical aspects from the trades you have taken by reviewing them post-market. Honestly, I enjoy reviewing my trades than trading in real-time.
So, what are the pre conditions to conduct an effective review?
The first and the foremost condition is, you must understand the methodology and significance of every damn thing you use in your trading. It is ok to blindly believe the structure we use ( HTF structure and the TTF trend structure), as it was given by a great trader, Lance, out of his experience. But you must ask a question starting with ‘why‘ while using the rest of the things.
Let us say, I mentioned not to take any trade against strength. Don’t believe it blindly. Ask yourself, why shouldn’t I take a trade against strength?
I mentioned to take the trade only at the significant price levels that is given by the market. Ask why?
I mentioned to initiate trades only after evidence of exhaustion, but not on seeing a candlestick pattern. Ask why?
In fact, try to get an answer from yourself for every damn thing I mentioned on this website. What is LWP and why we have to place the stop entry there? Why are we taking profits at T1 and why are we managing the second unit a bit loosely? Etc. Etc…
I know the answers, but I intentionally not mentioning them here as it kills your work. Feel free to ask me if you find it difficult to get an answer for something while introspecting different aspects of the methodology.
Simply put, you must understand what, why and how about everything we use about the methodology. Don’t believe in something if you are not convinced with your answer. If you truly want to succeed in trading., put the hat of the seeker, not that of a believer. Understand this, you cannot learn everything about something just by reading it once or twice. You must conduct an interview with yourself every time you read that to check whether you got everything that you were told.
In this article, I will talk about reviewing the entries. Reviews can be conducted to improve the trade management and other different aspects of trading, that you can do on your own.
Reviewing a group of trades:-
Once the methodology is understood, it’s time to categorize the trades you have taken. Gather the TTF and LTF charts of your losing trades(or any trades you want to review), at least 20 trades. There will be a pattern in your losing trades if you can clearly see, ie. there will be something common in most of your losing trades. Identify that pattern. I give a few examples, you can identify a lot with your reviews.
If there is no pattern, either you didn’t understand the strategy in whole or you are not correctly executing the strategy as the trades are random. Stop trading live and start reading about the methodology or use bar replay to practice more.
Most of the trades you entered with limit orders are not hitting the LWP. The root of this issue most likely be, your entries are against strength.
Most of the trades are hitting the first target and is not extending beyond the first target. If you see this in your trades, you have problems with identification of the future bias.
The market is hitting the stop in most of the trades, and then moving in favour of your trade. If this occurs, you have problems with identifying the exhaustion. Better to avoid limit entries for few days in this case.
The market is hitting the stop and is significantly extending beyond your stop and then reverses in favour of your trade. You have a problem with the identification of the price levels to initiate the trade.
Most of the trades are not moving in your favour for hours even after hitting your stop. If this is what you face, you don’t understand the methodology in whole. Its time to stop live trading for a few days and hit the trading books to start it from the first page.
If you are missing a lot of good trades or giving late entries in the retail zones, you are not anticipating, you are just reacting to the markets. This increases the initial risk and degrades the expectancy of the methodology.
If you end up fighting the bias all the time, you are not structuring the market properly. Finding future bias is next to impossible if you are not perfect with structuring the market.
These are the big issues that traders generally face during the early stages of the trading and I am sure that you will see a lot more like these in your losing trades. If you understand the methodology, you will know what’s the root behind that pattern of losing trades and you can work on it later.
Reviewing a Single Trade:-
Once you attain consistent profitability with your system, you would like to review a single trade that keeps on repeating in your trading. While reviewing a single trade, there are two questions that has to be answered.
Should I avoid this trade? or
Should I time this better?
The answer is simple, if the trade you are constantly taking is not moving in your favour even after hitting the stop, it must go into the avoid category. If it is moving in your favour after hitting the stop, it goes into the time it better category. In the second case, it is better to avoid the first entry and enter on the second attempt (weak retest of the LWP) if the market gives any until you work on your skill to read exhaustion properly.
I conduct daily and weekly review of the trades I have taken and the trades I missed to improve my trading. Do it yourself with your own understanding of the methodology and you can make your own reviewing procedure. Use this as a blueprint. Finding the root cause of the failure patterns in our trading is the goal of reviewing process. The job is just half done. You must work on the root of this issue once that is identified. Use market replay for that process.
Basically you mean……
“Do not believe in anything simply because you have heard it. Do not believe in anything simply because it is spoken and rumoured by many. Do not believe in anything simply because it is found written in your religious books. Do not believe in anything merely on the authority of your teachers and elders. Do not believe in traditions because they have been handed down for many generations. But after observation and analysis, when you find that anything agrees with reason and is conducive to the good and benefit of one and all, then accept it and live up to it.”
Buddha quotes (Hindu Prince Gautama Siddharta, the founder of Buddhism, 563-483 B.C.)
That’s exactly what I mean Invictus. We don’t need to believe anything that is out of our experiences. It’s just my opinion though and that’s the way I live my life too. That quality is keeping me away from a lot of conflicts and arguments, as believing something blindly and defending that belief is the root of all conflicts.