I started my journey barely a year ago and had absolutely no trading experience.
As many traders recommended, I began demo-trading.
My goal was to show good results on the demo first and then start trading live.
Unfortunately, there are limits to how much demo-trading can teach you.
A demo account is a great place to learn how the broker platform works.
It’s even better for learning how the new strategy you just discovered works.
But for the real experience, and to truly evolve as a trader, you have to go live!
I compare this demo-to-live experience to my days as a kick-boxer, stepping into the ring was so different from any other training experience I had. It was not the ring itself that made me nervous, it was the fact that it was a match, meaning there would be a winner and a loser.
In trading, it’s the fear of losing the money you’ve worked so hard for. You will be afraid of losses, but it helps to remember that what matters is that you get better and better for every mistake you make. Of course, you have to evaluate the mistakes you make in order to learn from them.
How do you evaluate your progresses/mistakes?
You’ve probably been told that it’s important to have a trading diary.
But you don’t know how to start, and you don’t know exactly why it’s good for you.
If you have any experience trading, then you have had losses and wins.
And if you are just about to start trading, then surely you will win some/lose some.
I remember that I used to get sad and angry whenever I lost a trade,
instead I should have paid attention to what I had done wrong.
And whenever a trade ended well, I did not care whether it was because of luck or experience…
I simply ran away from the golden opportunities to learn valuable lessons.
This led me to making my own trading diary. I strongly recommend that you keep a public diary!
Why public? Sharing your diary on a website, such as binaryoptions.net, leads to other traders being able to give you advice. This is important if you want to speed up the journey of becoming a better trader.
If you are doing something right you will remember it for your next trade, and if you forget,
you can obviously look back into your diary and recall how you made the previous successful trades.
It’s natural that everyone, including you and me, love to flaunt our successes, not our failures.
Having said that, we still need to write about our mistakes. This is why some of us get better and stronger after a failure. This is not the same thing as ‘focusing’ on your losses, focusing on losses and evaluating them are two different things!
So, when you lose a trade, you will write about what went wrong, this helps you remembering that mistake. Once you see that you are writing about the same mistake for the third time
(hopefully you won’t get to the third time), you will promise yourself to never make that mistake again. Works for me! =)
How do you evaluate your trades? Firstly, start by marking your entries and expirations on the chart. If you are using MT4 you can just use the ‘Arrow’ toolbox.
Then you simply take a print-screen, paste it into your diary and write about how you convinced yourself into taking that certain trade.
-Why did you want to enter this trade?
-What gave you the exact confirmation for the entry?
-Which indicators played a role in your decision?
-You won/lost because?
Here is an example:
In the picture above you can see my entry, the orange arrow. The star is the point of expiration. You can also see a few lines I’ve drawn to show what I was looking for! Horisontal golden lines show support and resistance. Vertical line A shows oversold areas. EUR/JPY 20140120
The text below is related to the picture above, it’s from my trading diary.
The pair broke above ‘support 1’ and looked oversold on different time-frames.
Waited for a good entry on the 1-minute chart for a 15min Call Option.
Executed the trade at the Arrow, the Star is the expiration.
First yellow line from bottom to top is a new support which used to be a previous
resistance where price touched before. The break was a valid confirmation for the CALL.
If you find yourself being unable to answer the questions above when you trade, then you are doing something wrong! It could be that you don’t yet understand the finer intricacies of the strategy you are using. Maybe the problem is the strategy itself. Then you have to re-evaluate the strategy and make further studies before you proceed with your trading.
In conclusion, practice on keeping a diary and always evaluate your trades!
If you are carious about the strategy I am using I’ll present it here next week with a walkthrough including pictures! See you then!