More often than not, winning FX trades contain valuable lessons that a trader can build on to get more profits later on.
While losing FX trades offer the chance to learn from your mistakes, winning trades allow you to identify your strengths. In noting what you did right, you can remind yourself of the good trading habits that you can keep practicing in order to improve your profitability.
In some cases though, consecutive winning FX trades can lead to overconfidence, which can delude a trader into thinking that he no longer has anything new to learn. This is a dangerous assumption, as it might lead to overtrading or over-leveraging. Always remind yourself to assess your recent trades and even try do identify if you could’ve done anything better.
Lessons from FX Trades
Even if a trade turns out to be a winning one, there may be a few opportunities missed or trading rules not followed. Just because you wound up with profits doesn’t mean that your execution was perfect. In any case, it is important for your long-term consistency and profitability to review your trades and decision-making process.
What’s great about reviewing winning FX trades is that you are able to keep a positive mindset in trading. If you are in a losing streak, go over your previous winning trades and figure out why you were able to make profits off those. Was it a result of good foresight? Were you able to adjust more quickly to changing market factors? Was your analysis more thorough?
As you review your winning FX trades or compare it to losing ones, it might also be helpful to keep a list of lessons learned. That way, you will have a constant reminder of the takeaways from each trade and come up with methods to do better in your next trades. You can even add to your trading strategy rules or make the necessary adjustments.
Keeping track of your winning FX trades also reminds you to maximize your profit potential. For instance, if you had been comfortable with a 1:1 return-on-risk in the past, you can take a look at your winners and see if you could’ve made a 2:1 or 3:1 return-on-risk with a few adjustments. If you are consistently profitable with a particular strategy, you can also gradually adjust your risk for that kind of trade setup.
Always keep in mind that there is no end to learning in the forex market. Even if you are able to come up with one winning trade after another, there will always be a way to do better and lessons to learn so that you can sustain your progress. Market conditions may change from time to time but if you were able to build on your strengths, you can retain the same level of confidence in your skills and be in a better to position to make adjustments.
To contact the reporter of the story: Jonathan Millet at john@forexminute.com
The post Learning from Your Winning FX Trades appeared first on ForexMinute.