It is human nature to look for the guilty. When it comes to Forex, unsuccessful traders blame a bad trading strategy. And it is true but only in 5% of cases. The remaining 95% of traders themselves provoke their losses. Today I'm going to tell you an easy way to check if you should change your strategy or start working on yourself.
Who Needs This Check
The method I'm talking about is not suitable for everyone. If you are a completely newbie then such a test is not necessary for you. Just do your best while learning and trading.
Verification is needed for those who meet the following criteria:
- You have been trading for quite a long time. To conduct the test, you will need a trading history for the last 3 months.
- Throughout these months, you have used the same trading strategy. If you haphazardly open trades hoping to get lucky, then you don’t need this test. Lack of a plan is your main problem.
- You keep making losses despite your best efforts
The Actual Check
This test has one important rule: be 100% honest with yourself. If you are not ready to accept that you may be the cause of your trading failures then you can skip the check. If you're in the mood for work and success, let's get started.
Step 1
You will need a trading history for the last 3 months. There can be several ways to get it:
- Download it from your trading terminal. To do this, in your MT4 menu go to “View” - “Terminal” - “Account History” tab. Right click on history and select the 3 months period.
- FXCL clients can view the history in their Trader’s Cabinets. The account statement is also sent to you by mail.
- If you keep a trading journal, then you can take a list of your trades from there.
Try to print your trading history. This will make it easier for you to analyze your trades and draw the necessary conclusion.
Step 2
Check each of your trades for a clear adherence to your trading plan. If your trading position fully corresponds to your strategy, put a checkmark right next to it. If you have moved away from the plan, put an X mark.
If the deviation from the plan was really insignificant, which is quite realistic in Forex trading conditions, then you can put a checkmark. However, you need to be completely honest with yourself and cross out trades that didn't really match your strategy. This usually includes positions that are open for the wrong reasons:
- Greed
- Revenge
- Boredom
- Euphoria from a previous victory, etc.
Once you have mastered the assessment of your trades, proceed to the check itself. Count how many positions in a row you make with 100% adherence to your trading plan. If you were really honest with yourself, then you are unlikely to get 20 trades in a row. Or even 10.
If you are unable to follow your plan even 20 trades in a row, then the problem is not your strategy, but haphazard trading. The most common reasons for this are emotional trading and lack of discipline. It is up to you to decide which of these things you should work on. I can only wish you luck.