Forex tracking is something that every trader ought to have the ability to do all the time while using the appropriate tools.
Every now and then, a trader should check and review their trading history, just as businesses track their profit margins and best-selling products.
A good way for traders to organize their trades is by use of a trading report.
By consistently running a report and keeping important statistics along the way, a trader can identify what is and what isn’t working in their trading strategy or trading plan.
Keeping track of your forex trading involves more than just profits and losses.
Rather, forex tracking is an assessment of how you are trading over a period of time by tracking your developments and improvement as a trader.
How to Run a Forex Tracking Report
Whenever a trader intends to review their trading, having the knowledge of running a forex report is essential.
With most forex brokers, you should find the report tab at the top of their trading platform.
From here, a pop up will prompt you with some parameters necessary for completing the report.
Forex trading reports can date back up to the opening of your trading account; it’s, therefore, important to specify the period.
This will allow you to select a date from which your report should commence.
The last thing you’ll need to select will be the format menu. Selecting the format menu allows you to choose how your forex report will be displayed.
The forex brokers’ platforms allow you to run reports XLS (spreadsheet), PDF (document) or HTML (web) formats depending on the trader’s preference.
Once all the settings have been selected, and everything’s in order, the report can now be produced.
Tracking your Trading
Having your report ready, you can now start to track your trading. With the use of spreadsheets, this process can be even easier, although you can use your hand as well.
First, it is important to check out for your average profit relative to the average losses.
By so doing, you’ll be avoiding the trader’s common mistake through the use of positive risk-reward ratios.
If the average loss exceeds the average profit, it may be time to change your current trading plan.
Important Forex Stats to Take Note of Through Forex Tracking
Always remember the trading mistakes you’ve made.
Some of these mistakes may come as a result of changing or deviating from your normal trading plan.
Keeping track of the trading mistakes only serves to make you a better trader.
It’s not always that a good trade wins since at times bad trades also win. Winning depends on how you have played a trade.
Sometimes, you may end up winning a trade by closing early instead of sticking to your trading plan.
Well, this could be counted as a mistake if you have ended up leaving profits on the table when the price finally hits your take profit target.
On the other hand, a losing trade can also be regarded as a good one if you have put in proper risk management to minimize your losses should the price action turn against you. This is where I normally advise you to cut your losses early in case you are in a losing trade.
When you miss out on a valid forex trade set-up that goes along with your trading plan, this can also be considered as a mistake. Especially if you hesitated or if you were feeling distracted then.
If you’re able to track how many potentially profitable trades you’ve missed through forex tracking, then you could use this as a reminder to be more attentive and confident the next time you conduct a trade.
Markets tend to be full of uncertainties at times.
Recording how you come up with your trading decisions can give you a better insight on how to react during these periods, and the steps you can take to better your emotions.
Through forex tracking, you can use the data collected to gauge your trading performance.
This data can also be used to discover any psychological trading issues you may have and to change your trading style appropriately.
If, for instance, you realize that most of your trading mistakes were made while trading news releases, you can consider making some adjustments so as to come up with a trading plan which allows you to ride the flow-through instead of the initial volatile reactions to a report.
Let’s say most of the losses you’re making come from trading breakouts; you can decide to risk a smaller portion of your account for these set-ups, focus on range trades or trends.
This is another important statistic to keep track of. Win percentage shows whether you are getting more wins than losses or the other way round.
A win percentage that’s greater than 50% could remind you to take steps with a high probability in forex and could, therefore, prevent you from making irrelevant trades.
To have a positive expectancy, the number of your wins must be greater than the losses.
Forex tracking will help you identify this aspect.
Risk to Reward Ratio
This ratio compares how much you can potentially gain in a trade to how much you are risking.
An ideal risk to reward ratio (R: R) should go from 1:1 to a ratio as high as 1:10, depending on the trader and the types of the set-ups taken.
The point here is to ensure that your potential reward is at least equal to what you are putting on the line when executing that particular trade.
By so doing, you will be able to cover a few previous losses with just a single win and not the other way round.
However, you should not be running the risk of getting stopped out more often as you try to use tight stops with the objective of improving your risk to reward ratio.
Read: Crushing Forex Trading as a Business
Conclusion on Forex Tracking
Any serious trader must be aware of how crucial forex tracking is. If you are aware of what you are doing, then it also becomes easier to capitalize and expand on the things you’re good at while addressing your weaknesses.
When developing a forex tracking system, ensure that it suits the way that you trade.