Sometimes to get better in any profession you have to monitor your work. And it has to be judged by you before anyone else notice what and how you are doing work. Thus you can improve all of your working technique from time to time. This is a good and really effective strategy to improve yourself in any working sectors or any jobs. And the plus point is, no one will be able to judge you for poor performance. In the trading business, the system is the same. Here you can also use this method to improve yourself. Though there is no one to judge your performance, you will still experience the effect of poor performance. So, why not improve yourself before performing badly? Today we are going to show you how you can monitor if you are trading well or bad.
Comparing winning and losing trades
Trading is a business and it acts like a business. Here you make an investment in your trading account. Then you deal with your products here which is known as trades. You start to trade by buying or selling. Then after some time, you close the trade doing the opposite of what you did earlier. And based on the change in pips, you get to make profit and loss. So, if you can count how many winning trades there is in your account and compare them with your losing ones, it might describe your performance all by itself.
Learning from your mistakes
Mistakes can be very useful if you can learn from it. Open a demo trading account and start to trade the market with the virtual dollar. It’s very obvious you will make mistake but try to learn from it. Majority of the rookie traders are overtrading the market and losing a significant portion of their investment. But if you overtrade the market it will be really hard to learn from your mistake. You need to focus on the long-term market trend and write the down the details of each trade execution. Stop thinking about securing big winners in this market. Set rational goal and trade the market with discipline. Never think you will be able to change your life within a day. Consider trading as a long-term plan to change your life.
Using risk to profit ratio
Another thing that you can use for monitoring your performance is the risk to profit ratio. It is for monitoring the performance on a particular trades or all individual trades. It is represented something like 1:1. It is the ration of what you have invested and what you are getting from a trade. If you are investing too much than making returns the ratio would be like 2:1. Or if you are making losses the ration would be something like 1:-1. If you’re doing ideal the ration would be 1:2 or 1:3. Expert’s results in most trades remain from 1:2 to 1:5. Combining multiple trade’s ratios, you can estimate your performance in each trades.
Observing your own strategy
Without any tool or data, you can justify your trading performance just by monitoring your trading strategy. If you are playing too aggressive, you will be making more random trades. And sometimes, the trades will be simultaneous. Your chart observation will be very frequent too, as your brain might not want to miss any chance. Worse than that, you will start micro-managing every plan of yours before trading. Then after opening a trade, you will start thinking about it. When you are worried about money, it won’t get out of your hard. Even after you have closed the trade, it can haunt you with emotional problems. As a result, you will again start getting too busy with your trading. But that is not the most appropriate thing for doing well in this business. If you can relax your senses, it will be the best for your career.