We continue analyzing trading and looking for new tools for its optimization. We have already discussed how the risk per trade is calculated and how to analyze losing trades. Now it’s time to shed light on statistics.
Trading statistics is a powerful tool for those wishing to make money in financial markets. However, it often gets undeservingly ignored not only by novice traders but even trading veterans. Meanwhile, this tool can provide excellent feedback on your trading, and not only reveal your weak spots and mistakes but also help you rectify them and subsequently trade in the black.
Today, we are going to reveal how trading statistics can help you make money in the forex.
Simply trading is not enough. You must analyze your results. Without a proper analysis, sooner or later you will suffer losses instead of making profits. To prevent this from happening, you need to keep all your trading data in one place, preferably in the trading journal arranged in the form of a table.
During this step, you are basically collecting the data. The next stage involves its actual analysis. That being said, more often than not the majority of traders fail at it. There are plenty of reasons why they do not keep trading statistics (i.e. trading journals). “I forgot to do it”, “It’s inconvenient to write everything down”, “I didn’t have time to record it”, etc. The list of excuses goes on. In order to write down each of your trades, you need to have a high degree of self-discipline, or… you can take the easy route and simply use Trader’s Statistics, a handy solution brought to you by Gerchik & Co.
Being aware of all human weaknesses that traders obviously have as well, the creators of this software attempted to simplify the above task for their clients. Now your trading data are collected automatically. On top of that, you can also do an analysis in an automated fashion.
At this stage, we will assume that you are diligently collecting data either the old-school way by saving them in a file or using Trader’s Statistics, the software you can download on Gerchik & Co website.
Your next step should include analysis of the overall outcome, your winning and losing trades. This will allow you to identify the reasons behind trading losses, decrease the number of unprofitable positions, and start making money instead of losing.
Below are some of the tips that will help you with it:
Losing trades may include those that are considered to be inaccuracies of the trading strategy. They can be called ‘legit stop losses’ and shouldn’t result in an overall loss.
These may include:
Your task is to ensure that you encounter only ‘legit’ stop-loss orders’. Their presence, provided that you have a profitable strategy, will still allow you to trade in the black.
Winning trades also need to be properly analyzed. See if fears make you ‘steal from yourself’. Oftentimes, trading stats gets violated towards loss because the trader moves the stop loss to break even too early, thus getting either zero or barely making any profit whatsoever with potentially profitable trades. If you have that tendency, make relevant conclusions, and leave your stop loss alone after opening a position.
With Trader’s Statistics, you will be able to see your most profitable and unprofitable instruments and trading time periods. This will give you food for thought and relevant information to optimize the trading strategy.
If you make a thorough analysis of the winning trades, you may sometimes notice that their profit potential was much higher. E.g. Not 1:2 but 1:3 or 1:4. If this is confirmed in terms of your strategy, you can carefully increase your take profits and monitor further results.
Everyone who strives to make money in the financial market needs to know what forex trading statistics is and keep a trading journal religiously.
There’s no magical recipe. You just have to do it. To not miss anything, make adjustments or exceptions for yourself, all of which will eventually affect the outcome of the analysis, be sure to switch to automatic statistics generation, and catch profits like nobody’s business.
In our next articles, we will share how to open trades with surgical precision.