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One of the most important things that a trader must do in order to improve his trading performance is to review his trading performance and analyze his losing trades. This is so crucial because improvement cannot happen until you know which area you must improve. Identifying the problems is already 50% of the solution. Unfortunately, many people forget to perform this very important task. Needless to say, they don't see any improvement at all in their trading performance.

What exactly is the purpose of reviewing the trading performance and analyzing it? This task is useful for at least four reasons. First of all it helps us not to forget our trading rules. We check our losing trades to see whether we already follow our trading rules or not. Sometimes we deviate from our trading rules and lose money because of it. So we need to find out what made us violate our own trading rules so that we can avoid doing the same mistake in the future. The next thing is we can see how we fare with our weaknesses. Every trader must conquer their own weaknesses. Some people lack discipline so they must deal with that issue. Some other people lack patience so they must train themselves to be patient and not open positions too early. There are also people who are afraid of losing money and always cut their profit short. This type of people must deal with their own fear so they can make more money instead of cutting the profit too early.

Reviewing the trading performance also lets us see how we fare with other traders or with our previous performance. Sometimes we think we are performing well but we are not actually performing that good compared to our peer or the industry standard or our previous performance. So by doing the task of reviewing our trading performance we keep ourselves in check with our surroundings. The last but not the least is we can find room for improvement. Maybe we can find insights from our mistakes that we didn't realize before.

There is one important thing that must be mentioned though. The fact is, sometimes the losing trades that you experienced are not caused by you. In other words, the problem might be in trading method/plan that you use. As we all know, forex market is always changing even though they say that the history repeats itself. So what do we do if we found out that this is actually our problem? The answer is, as you can guess, change the trading method. Why? A trading method is the culmination of the designer's trading experience. If the designer is someone new to the market he might not be able to design a trading method that can withstand various market conditions. If the designer is a seasoned/professional trader you can expect that his trading method will come out strong against all market conditions. This is a simple common sense, right? This is why, it is very important to know who designs the trading method that you are using because this will help you eliminate most problems regarding to your trading.

Imagine spending effort, money and time only to find out later that the core of your problem is actually the trading method. Frustrating, right?

Losing trades are not there for you to mourn your lost money. They also serve as a way for you to improve your trading performance. Reviewing it and analyzing what happened will take some time and effort but it pays off. The most important outcome of this task is you can improve your trading performance, become much more efficient, strong in trading and make more money. Remember to do this important task periodically so you can benefit from this important activity and I sincerely hope your trading performance will increase.

They say curing is a lot harder than preventing. This is true in all aspects of life and especially in trading. As you have read above the most expensive mistake you could ever make is to use a trading system that is not that good. And this is why your first step as a trader should always to find a great trading method and if possible, learn directly from the designer of the trading method. The best trading method is the one that can make many people replicate the trading success of its designer.

Article Source: http://EzineArticles.com/6583835

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