Making efforts in trading should not really end every after trades. Even when a trade finishes, you still have to retrospect. Retrospect? Retrospection applies in any trading result. For instance, if you lost, you want to analyze and study what went wrong or which things you may have overlooked. In another scenario where you won, winning does not mean that you should leave as it is. Instead, pick up bits and pieces of what you did in the trade that made you win. Retrospection means looking back at the occurrences that already took place.
First, let us talk about how the trade performed.
During retrospection, assess how well or how bad the trade turned out. Here are some bullet topics that you can explain in your journal.
- Position size. Assess whether the position size was the perfect fit for the risk and reward ratio of the scenario.
- Entry-level. Assess if you should have used a better level or better tools in your entry. Also, think about your timing, whether you were in haste or you were late.
- Take profits. Was it a realistic figure or not?
- Market behavior. Assess whether the market was in terms of you take profit or stop loss level choices.
- Fundamentals. If the market made a massive move, know the economic news or press release behind it.
How about your trade management?
During retrospection, you need to assess your resolve. Were you disciplined enough? Did you let your emotions take over most of you?
- Market monitoring. Assess whether you were able to keep an eye on the market enough or not. List all the reasons if you were not able to do so.
- Trading plan. Write all the modifications you did in your trading plans if you did. Also, write the reasons for the changes.
- Stop losses. Write all the adjustments you made in your stop losses if you have and write the reasons why.
- Trade close. Your trading journal will always say something about the way your trade should close. Write if you were able to close the trade as planned or the market made an unexpected move.
Next, your improvements as a trader
During retrospection, you need to reflect on how you can improve as a trader regardless if you won or not. In this section, you need to be specific to know what you can do better in your next trade. For instance, if you are holding winners, talk about how you will hold them longer next time if the same situation arises. Think about a profit target that will work better for you if you are not contented with your current one. Finally, explain how you will be more disciplined and hold back your feelings about certain circumstances you think you are losing.
Our final thoughts
Here is a piece of unsolicited advice before we cap off our lesson: try your best to stick with the trading plan you prepared in the first place. Do not let your emotions take the most of you. Discipline is the key.