The difference between a bad trade and a losing trade

[FXS London Scalper]

It's worth separating these two clearly. A losing trade followed the rules and lost. A bad trade broke the rules, win or lose.

Counting them separately in a journal is simple: add a column, process OK or not, filled in honestly before looking at the result.

What to look for after a couple of months:

• The share of trades that broke a rule.
• The average result of those trades.
• Especially the bad trades that won.

That last group is the dangerous one. A rule broken and rewarded teaches you to break it again. Over time, those small rewards make the rules feel optional, and the bill arrives on the day when the same shortcut costs 3R.

A way to grade that keeps the focus right: process first, result second. A good losing trade gets a check mark. A bad winning trade gets a cross. The P&L column still exists, but it isn't the grade.

It also changes how losses feel. If a trade followed the plan, the loss is just the cost of running the strategy, the same as spread or commission. That makes the next trade easier to take.

Does anyone grade trades on process like this? How do you handle the grey cases?

[Amanhasnoname]

I've graded on process for about a year and the grey cases were the hardest part at first. What helped was writing down, before the week started, exactly which rules were hard rules and which were judgement. Stop placement, maximum size, no trades in the two minutes around a release, those are hard. Whether a setup is "clean enough" is judgement, and I only mark that as a bad trade if I'd have rejected the same chart when reviewing it cold on the weekend.

The bad winners were the eye-opener for me, just as you describe. When I went back through three months, I found I'd moved my stop wider eleven times, and seven of those turned into winners. That record had quietly convinced me that widening stops worked. The four that lost cost more than the seven made, combined.

One small change made the process column more honest. I fill it in straight after entering, before the trade is closed, so the result can't colour how I judge it. If I forget, I leave it blank rather than fill it in afterwards.