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Do You Learn from Your Winning Trades, Too?

By Robert Colville on February 13, 2015

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Winning trades: By far the most enjoyable subject for traders to talk about, and rightfully so! Winning trades are the ultimate end result for traders, and in addition to making you sound really cool at cocktail parties, winning trades provide confidence and validation…and not just about the trading strategy, but perhaps about the trader as well.

Amidst all the thrill and elation, though, it’s how we handle and learn from winning trades that’s really most important. After all, you want to get to feel that same excitement more often, right?   

Now, we talked recently about how to learn and recover from losing trades, which is a powerful lesson in itself. But winning trades are perhaps the best learning tools around, so rather than simply basking in the glory each time, take these steps to analyze how and why your winning trades happen, and you can set the stage for more consistency and success over the long term.

Find Out What Caused Your Winning Trades…

Log Winning Trades in Your Trade JournalSo, what is your existing process for handling winning trades? (And please don’t say, “Figure out how to spend the profits!”) Hopefully, one of your first moves following winning trades is to log them in your trade journal, and if not, well, it should be.

The markets move quickly, work and life can get in the way, and you’ll soon get on with your trading and forget all about it, so immediately following winning trades—while it’s all still fresh in your mind—make sure you document that trade so you can see what went right and how you can continue to build on it going forwards.

Some important items may include:

  • Macro FactorsThe market or currency pair, date and time of day, volatility, prevailing market conditions (uptrend, downtrend, or range), plus any pertinent news and/or economic data, etc.
  • The Trade Set-up – Draw, copy, or even print the chart pattern and note the initial reasoning for taking the trade
  • Entry & Exit SignalsIdentify the specific triggers used for getting in and out of the position
  • Trade Psychology –  Capture your state of mind and thought process before, during, and even after the trade
  • Comments – Any notes, reaction, and action items you wish to do the same—or differently—for future trades

Do this for winning trades as well as losing ones, and as you analyze the data in your trade journal, you’ll likely see themes developing, and that’s how you’ll get a feel for what’s working in your trading and what’s not. Next, use that data and take action, whether it’s to further develop your methods and overcome weaknesses, or as we’ll explore now, to do more of what works, and less of what doesn’t.

See related: How to Profit More By Doing Less

And Then Do It More Often!

Find out What Causes Winning TradesKnowing what causes winning trades is fantastic information to have, way better than any “hot trade tip” you may pick up from outside sources or the financial media that’s entirely unproven when it comes to you and your trading. So, once you’ve identified the items that pay off for you, be it certain set-up(s), signals, or maybe even just a frame of mind that you know helps contribute to your winning trades, well, keep using them! Winning streaks have been made from much less, after all!

It’s normal to find that select set-ups and strategies will work best under certain market and volatility conditions, so it’s hardly a coincidence if you happen to see the same ones producing the vast majority of your winning trades. If so, take that as a validation signal from the markets, and cast aside unproductive set-ups in favor of the top-performing ones. That’s a good way to simplify your trading, and possibly shift the probabilities more in your favor as well.

In all, embrace the fact that there is perhaps no better, more reliable information than what you can get from winning trades, so especially on the heels of one, get heavily committed to repeating the behaviors and tactics that you know work!

Conclusion

There’s no better feeling than when a range of factors come together to produce winning trades, but what happens after that is often far more important than many traders think. Winning trades shouldn’t be taken for granted just because they’re the “expected” result, and, likewise, we can’t get so caught up in celebrating—or focusing on the money that was made—that we forget to analyze and learn from what we did so well in the first place.

Don’t become overconfident or cocky following winning trades, but instead key in on the factors that caused them, and work hard to repeat the process going forward, since that’s well within your control. You know, for all the education and unique ideas out there about how to trade, there are no lessons more valuable than the ones you discover yourself on the heels of your own winning trades!

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Robert Colville

The Lazy Trader is a fund level Forex Trader who trades for no more than ten minutes a day. If you want to learn to trade successfully in his set-and-forget style, have a look at his online trading course

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Robert Colville

The Lazy Trader is a fund level Forex Trader who trades for no more than ten minutes a day. If you want to learn to trade successfully in his set-and-forget style, have a look at his online trading course

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