The following trade review examples have been taken (with permission) from some email conversations with Josh, a trader of the YTC Price Action Trader methodology.
He's still in the early stages of his development, developing confidence in his strategy and processes through historical chart review. He's doing this using ForexTester software which allows for trading of historical charts as if it were a live market environment.
Josh has been making tremendous progress. The two most recent months results were as follows:
- 25 trades
- 16 winners
- 9 losers
- Average win: $249.42
- Average loss: $141.94
- win%: 64%
- win/loss size ratio: 1.75 : 1
- 13 trades
- 9 winners
- 4 losers
- Average win: $401.72
- Average loss: $190.28
- win%: 69%
- win/loss size ratio: 2.11 : 1
In both cases the win percentage is really healthy. And the winners are significantly larger than the losers. Too many people over-analyse their individual loses in attempt to avoid them in future. By all means analyse them and improve your knowledge and skill. But accept as well that you'll always have losses. And as long as you manage them, as Josh has been doing (ensuring they're cut short and that the winners are held for larger profits) then the losses are quite acceptable.
What is not to love about those stats. Josh has a great edge here… evidenced as well by the nicely rising equity curves for each month, and the distribution graph showing larger bars on the winning size (also included in his email but not shown here).
This is great trading.
My advice to him: Continue exactly as he's been going.Set this as his benchmark (or even set slightly worse) and continue from here aiming for consistency in results. If he can maintain this approximate performance for another 18 hindsight based months, I'd want to then see him transition to forward testing. (Note: a month of hindsight based trading using forextester does NOT take a month… just in case you were worried about how long this might take!)
But that's not the point of this article!
Rather, I want to talk about a key part of the process that Josh used to get to this point.
Volume five of the YTC Price Action Trader talks about trader development and how it's a result of deliberate practice methods combined with a Trade-Record-Review-Improve cycle. A key component of this is effective documentation and review. What I want to show in today's article is the way that Josh marks up his charts and saves them for future review in his Trades Journal. I think it's great. If you're not doing something similar… start it now!
Three of his trade examples are shown below, including two wins and a loss. If you click on the images they will open in larger size in your browser. You'll note that they all follow this same format:
YTC PAT traders… analyse his trades as well (GBPUSD / TTF: Daily / LTF: 4H).
Everyone else… just take note of the way that Josh documents his trades into a Trade Journal.
(Click on the images below to open a larger copy in your browser)
Are you following a similar process? If not, why not? Start it now. The quality of your documentation and review ARE a good indicator of the degree of progress you can expect to make in your journey to becoming a professional trader.
See the Resources Page for the screen capture and image editing software I currently use (look under the heading of Business Management): http://yourtradingcoach.com/resources/