Learning from Trading Mistakes

It is very important to learn from your past mistakes in anything you do. This way you can be continuously improving your life. The same goes with trading, it is a very wise decision to keep a trading journal and update what you have done periodically.

Anytime you start to lose money it can be a good idea to review your positions and figure out.

1. What you Did Wrong

What did you do that caused you to lose money? Was it just a losing streak? Every trading strategy will have a losing streak here and there and there isn’t much you can do about it. But sometimes you would lose money because of something else, such as letting your losses grow too big, not being diversified, letting your emotions get the better of you.

The first step to figuring out how to stop losing money is figuring out why you lost it in the first place.

2. Decide what you Can Do to prevent it in the future.

For instance I started trading with a 1 to 1 risk reward. I figured I was right a lot of the time so I didn’t need to control my risk as much. Well after my first big losing streak I decided to cut it down to a minimum of 2 to1 risk reward.
That way my losses are very small compared to my wins.

3. Test Again

Once you think you have got it, it is important to test your new theory to see if it holds up. If it does great keep at it, if it doesn’t well it is back to the old drawing board.

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