Learning Performance Tracking In Forex Trading.

The Forex market is volatile in nature. The movement can most times be unpredicted. You might think it will go up but it goes down and it can go vice-versal. However, people have pitched their tents around it with the hope of earning from it. As a result, price speculations had become the order of the day.

The ability to speculate correctly might not guarantee you success because traders have eventually come to face the reality that speculating correctly doesn’t mean you can predict what your return on capital will be after a certain period of time. You might think you would make 25% profit at the end of a trading month and realize you ended that month in a loss.

You might also project 25% profit and end up with 50% profit which is better than your expectation. You might expect a 25% return and end up with 5%. It goes anyway.

This is why no one can predict the outcome on a trading account at the end of a trading month. Even the banks don’t attempt to do that. As long as it’s a speculative venture, it falls under the world of probabilities.

Note – With this truth established about the reality of the trading and investment world, you should be wary of people that promise a fixed amount at the end of a trading month. Professionals leave it to probability.

However, to ensure you do well in the world of speculations and probabilities, you need to understand that your own performance needs to be monitored. This is necessary because it helps you appreciate when you are doing well and analyze properly when and why your performance drop.

Every business has a track and monitoring performance graphs. 

I'll first show you what a business performance graph looks like before explaining to you what a trading performance tracking is all about. 

Business performance graph looks like the image below.

We can see that they made a profit and grew in sales but the growth was tracked. You can also see that it was a quarterly zig-zag upward movement.

The information derived from this graph can help them know what they did well during the time the graph went up and what might have gone wrong when the graph went down. Sometimes, the reason for the downward performance might not even be an internal factor; it might be a problem of the environment, but performance tracking helps put things in proper perspective.

For a trader, performance tracking helps the mind to keep things in the right perspective at all times. It allows the trader to quickly spot mishaps and make necessary corrections during the trading journey. 

This is what a trading performance tracking looks like:

When traders take on the Forex market, they do so mostly in an unorganized way. They trade the market using more than one strategy. So they end up with a performance result that is scattered. It’s not measurable.

Let me present to you a scenario that explains the benefits of tracking your trade performance.

Let’s assume YOU are our regular Forex trader. What we expect of you like the majority of Forex traders is to trade the market and your account with about 5 different strategies.

While you are trying to figure out your way in trading, you will trade using a trend trading strategy, a reversal strategy, a sideways channel trading strategy, and a breakout strategy. All is mumbled together in one account. The challenge with that however is this:

Every trading strategies have winning streaks and losing streaks.  The losing streaks in one of your strategies will erode the winning streak of another in your strategy.

Assuming one strategy had 5 winning trades in a particular week and another strategy had 5 losing trades that same week, the bad performance of the losing strategy will erode the good performance of the winning strategy for that week. This can lead to a discouraging trading week for you.

If trading one account with two strategies can throw you off balance this way, imagine trading one account using 5 different strategies.  

So let’s take a further look into your outcome in a particular trading week.

You traded with 5 different strategies. At the end of the week, you arrived at 11 wins and 13 losses. On the surface, this was a bad trading week. This is a discouraging week for you.

What you probably don’t realize is that if we delve into proper performance tracking by segmenting each of your strategies  for their individual outcome, we would be seeing something quite remarkable that you not aware of

Now, here is the breakdown of how you arrived at 11wins and 13losses.

 

After Strategy ONE performance was tracked, it had 3 wins and 2 losses. Good trading week.

Chart Performance image.

After Strategy TWO performance was tracked, it had 4 wins and 1 loss. Good trading week.

Chart Performance image

After Strategy THREE performance was tracked, it had 3 wins and 2 losses. Good trading week

Chart performance image.

After Strategy FOUR performance was tracked, it had 0 wins and 5 losses. Bad trading week

Chart Performance image

After Strategy FIVE performance was tracked, it had 1 win and 4 losses. Bad trading week.

Chart Performance image

These analyses revealed that three of your strategy performed well while two did badly. However, the two bad performances eroded the good results the other three produced.

If you had traded each strategy independent of the other using one strategy for one account, you would have been able to see what you were doing right with the strategies that performed well and how to increase their efficacy.

On the other hand, you would have quickly stopped your tracks on the ones that weren’t doing well and come up with proper adjustments to reduce their losses. You could have come up with ways to make them perform better or at best, you could choose to even discard them in total.

Here is why we emphasize proper performance tracking for our students. Trade performance and result performance. This is one of the most important parts of a trader’s journey to mastery. Interestingly, most aspiring traders don’t even have it as part of their trading practice. Proper performance tracking with accountability had improved the overall trading experience of our students.

This accountability concept is required in two-tier structure.

The student is accountable to themselves by filling out the performance. They can see things for themselves. Students score themselves and they are also able to look at it and look for where adjustments need to be made. That’s the first leg of the accountability structure.

Secondly, they are accountable to us because we would be requesting to see the performance chart.

Weekly performance tracking leaves no room for a student to waste any time. If things aren’t working right, the cracks will be spotted and tackled on time because the review is done weekly.

If you would like to enroll in our Forex Apprenticeship trading program where we personally work with our students to improve their trading performance with proper tracking concepts like the one explained above.  Click on this link THE FOREX APPRENTICE to find out what it all entails. The experience and drills make our traders better than any average trader in the industry.  

If you have already started taking baby steps in Forex trading, I explain here how to use Indicators to trade the market. You should take a look.