It only takes a few minutes to review a trade that you have just closed. Though most people overlook the importance of this brief examination, the benefits of a simple trade analysis are huge. This value is certainly true both in future profit potential and the positive effect of quickly improving your online stock trading methods.
It's very important to keep a trading journal. You can use something as simple as a plain paper notebook or as sophisticated as a trade management software program. Whichever you choose, here is a short list of questions to include in each trade review ...
- How did you choose your trade?
- What were your reasons for buying or going short?
- What was the basis for the trading setup - perhaps a certain pattern, indicator, or moving average?
- How did you feel as you placed the order?
- Was the order filled close to the actual entry price?
- Did you enter a stop?
- What were your thoughts as the trade progressed?
- How well did the stop work?
- Was it too tight or too broad?
- How did your exit strategy perform?
- What emotions emerged once you closed the trade?
- Did you stick with your overall online stock trading plan?
- Should you have done anything differently?
A calm analysis of your trades will give you much more than excitement from a big winner or disappointment from a loser. Keeping a log of the "before and after" aspects of your online stock trading experiences will help you learn from the past and improve your methods.
The review process also lets you be more objective about your emotional strengths and weaknesses. Not surprisingly, this type of routine self-assessment will dramatically improve your online stock trading skills.