Look At Your Trades
"Looking at what your trades do
is the way to get ideas."
Professional traders are always looking for ways to improve their systems. They know that over time, the markets become more used to their systems and that they will become less effective if they are just left as they are.
It is hard to explain how the markets adjust to systems being traded because of course they have no actual knowledge of all the individual traders or their systems.
Even so, somehow individual systems seem to do less well as time passes if they are left alone.
Different traders have different views on this subject but all of them appear to agree that it is worthwhile spending time trying to improve their systems.
Of course, the rules of your system are what determines how your trades start and finish and by looking at the chart of any individual trade you can tell exactly what was going on while it was in progress.
Depending on what you discover, questions will occur to you during your trade studies, such as:
Do the trades behave as I envisaged, or in ways that were not intended when I established the system rules?
What ideas am I getting for improvements I may be able to make?
Am I still comfortable with my system or are there some behavior traits I need to correct?
All traders should be encouraged to look at the detailed performance of trades. This is perhaps the aspect of trading that is most neglected, although the potential benefit is considerable.
Not everybody wants to look at individual trade performances - if you feel this way and you are happy with your own method, that's fine.
However, it is recommended that all traders make the effort to carry out a sample study of individual trades at least once for any system they intend to trade.
In addition to being a rewarding exercise it is likely to be an enjoyable one. The best material to use for the sample is test material of the trader's selected system.
Traders interested in creating their own system rules are likely to find that studying the trade performance of existing systems provides rich material for generating new ideas.
Looking at what your trades do will definitely give you ideas on ways to improve your trading performance.
Copyright David Bromley 2006
All Rights Reserved.