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.

[Fairman]

Worth doing the same with the five best trades too, side by side with the worst. The contrast shows what the good conditions look like, not just the bad ones. For me the best trades were almost all in the first two hours of London with normal spread and after a break. That gave me a positive picture to aim for, and aiming at something is easier for me than just avoiding things. Doing both side by side takes about an hour once a month and gives me more to work with than weeks of looking at totals.