How to Conduct an Effective Trading Session Review – 1 of 2

One of the greatest processes you have at your disposal, for maximizing your learning and fast-tracking your development as a trader, is your review process.

Let’s have a look at how I recommend you carry out this often-neglected part of your daily trading routine…

For too many traders, the review process is simply entering their trading results into their trading journal spreadsheet and then looking at their daily P&L. While that is important, as part of your daily admin and longer-term strategy review processes, it’s not a session-review process.

The important principle behind an effective daily review process, in my opinion, is carrying out a comparison between your performance and perfect performance. That is, looking at the session with the benefit of hindsight and asking some hard questions about both your read of the market environment and your ability to trade that environment.

The following are some examples of session review Q&A which you may wish to consider, based on a discretionary trading strategy. Of course, you’ll need to adjust, add or delete as required to suit your own trading style.

Market Environment

  • With hindsight, how would you define the market environment?
  • How successful were you in identifying the market environment during the trading session?
  • What signs were present to indicate this environment?
  • What key pattern features were present and how could they have been used to identify the market trend and bias?
  • Step manually through the chart bar by bar, or use a market replay feature to step through the chart at high speed, observing the market environment and the signals that identify that environment, trend and bias.
  • Print the chart and add appropriate notes to your Market Structure Journal.

Trades Taken

  • With the benefit of hindsight, was your trade based on a valid setup for that market environment?
  • If this was a valid trade:
    • Review the signals that led you to identify the trade opportunity?
    • What was the ideal entry point? How does that compare to your entry? What signals (if any) did the market provide, which could have led to an improved entry?
    • Was the initial stop location appropriate? Was it in accordance with your trading plan? Where, with the benefit of hindsight, should the stop have been placed? What signals (if any) did the market provide to identify that location?
    • What was the optimal trade management strategy, in order to minimize risk when wrong or maximize gain when right? How does that compare to your trade management strategy? What signals (if any) did the market provide for moving the stop to breakeven, or beyond?
    • What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? How does this compare to your exit location? What signals (if any) did the market provide to identify this ideal exit location?
  • If this was not a valid trade:
    • What signals were present that should have led you to avoid that trade?
    • Having got into the trade, was the initial stop location appropriate? Was it in accordance with my trading plan? Where, with the benefit of hindsight, should the stop have been placed? What signals (if any) did the market provide to identify that location?
    • What was the optimal way to manage this trade, in order to minimize risk when wrong or maximize gain when right? How does that compare to your trade management strategy? What signals (if any) did the market provide for moving the stop to breakeven, or beyond?
    • What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? How does this compare to your exit location? What signals (if any) did the market provide to identify this ideal exit location?
  • Replay that portion of the trading session, making optimal decisions for valid trades and avoiding invalid trades, either by stepping manually through the chart bar by bar, or use a market replay feature.

Trades Missed

  • With the benefit of hindsight, where were the valid trade opportunities that were missed?
  • For each of these trade opportunities:
    • What signals did the market provide that should have alerted me to the trade setup?
    • What was the ideal entry point? What signals (if any) did the market provide, which could have led to identify this ideal entry?
    • Where, with the benefit of hindsight, should the stop have been placed? What signals (if any) did the market provide to identify that location?
    • What was the optimal trade management strategy, in order to minimize risk when wrong or maximize gain when right? What signals (if any) did the market provide for moving the stop to breakeven, or beyond?
    • What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? What signals (if any) did the market provide to identify these ideal exit locations?
  • Replay the trade, making optimal decisions, either by stepping manually through the chart bar by bar, or use a market replay feature.

 

Simple – a comparison between your performance and perfect performance, with a replay of the perfect performance in order to reinforce the lessons learnt, and hopefully lead your future trading sessions just that little bit closer to perfection.

The same process can also be adopted for reviewing other areas of your trading business, such as your physical and mental performance. Compare your performance with perfect performance, reviewing the way you should have performed that session, and hope to perform in future sessions.

I’ll leave you to come up with your own questions for that – I can’t give it all away, can I? 🙂

Happy trading session reviews,

Lance Beggs

NB. See Part Two (with a worked example of the review process) here: http://yourtradingcoach.com/trading-business/how-to-conduct-an-effective-trading-session-review-2-of-2/


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