Reviewing my five worst trades each month, and what they had in common

[Fairman]

Reviewing my five worst trades each month, and what they had in common

at the end of every month, I pull out my five worst trades by result, and I look at them side by side. It's uncomfortable but useful. The point isn't to feel bad, it's to see if they share something.

When I started, I expected them to be a random assortment of bad luck. In practice, they had a lot in common. Most were taken outside my main sessions, most had a wider spread than normal at entry, and several were taken within an hour of a previous loss. They weren't unlucky, they were predictable.

Having that list has changed how I think about risk. I no longer worry as much about the setups themselves. I worry about the conditions around them: the time of day, the spread and my state after a loss. Those are things I can control.

I write down one rule from each month's review, and I add it to my checklist. It's a short list now, and every item on it came from a real trade. That makes it easier to follow than a list of generic rules.

[Fairman]

This is a great habit. I tried it and found the same kind of thing. My worst trades were mostly outside my main session and after a loss, not because of the setups themselves. The point about the conditions around the trade being more important than the trade is the key. Now I have rules about time, spread and state, and the setups are the same as before. It is one of the most useful half hours I spend each month, even if it is not a fun one.