It is so important to keep a detailed record of all of your trades, and for today’s forex-related article, I would like to run through exactly why this is the case and what you can do to achieve good record-keeping.
To begin with, your records are for you! They are there to allow you to review your trading performance, to allow you to work out your maximum drawdown, to let you analyze which kinds of trades have been the most successful and which have been unprofitable, to show you which pairs you have traded have been the most profitable, and perhaps in times where the markets are not being kind to you, to reinstall some confidence based on your past results.
Now, you might argue that Metatrader keeps a record of all of your trades for you and even draws a nice little graph of your equity curve. But really, unless you are already risking the same amount on each trade, it is going to give you a distorted view of events. What you really need to do is to also record each trade as a level stakes risk, as it were, so that you can really see how well your market edge is playing out. It is no good risking 1% on each trade, and then after several losers, risking 5% in an attempt to win back your losses. This is not a good way to trade. You need to know how well your edge is playing out, and you can only really do this if you can see what is happening when you risk the same amount on each trade.
So, record your trades and add all of the data like the date, pair, type of trade, type of setup, your risk, and of course the result. It takes just a few seconds every trade, and if you don’t, then you will more than likely regret it in the long run.