In day trading, understanding market patterns is crucial for success, but equally important is the proper use of psychological strategies and emotion management methods.
In one of our previous articles, we discussed emotional stability as a critical element, highlighting the importance of maintaining a journal of performance and success. However, alongside journaling, another significant aspect for effective analysis and adjustment of personal strategies in day trading is summarizing outcomes after specific trading periods. These summaries help establish certain checkpoints for better comprehension of strategy effectiveness and adjustments to enhance performance.
Creating a Template
Firstly, determine the frequency of conducting such analyses. They should not be too frequent. A short trading period may not be indicative. So-called losing streaks can last for several consecutive days, and basing conclusions solely on them is not advisable. From personal experience, such analysis should be conducted monthly, no more frequently.
Once the frequency is established, determine the reporting format and the points it should include. Create a template for a comparative assessment and characterization to be conducted monthly. Of course, it should include basic data – the amount traded, total P&L (profit and loss), and their percentage ratio. For accuracy, it’s better to calculate P&L statistics by “downloading” a statistical file from the exchange you trade on – this option is available on the vast majority of them.
What to Focus on
After obtaining accurate overall statistics, sort the results by traded pairs. Conduct an analysis to identify which pairs yielded better results and which ones did not meet expectations. Based on this, make adjustments to your trading strategies.
Analyze your mistakes, determine which actions led to the majority of profits, and which ones resulted in losses. Evaluate your behavior during these instances – whether your chosen strategy was strictly adhered to. If not, consider obvious changes and think about adjustments to improve your results.
Calculate the total amount of paid commissions and assess them in relation to your profits. Optimizing this parameter can be a significant factor for making changes in your work – such as altering the frequency of market entry or exit. Perhaps it’s time to explore offers from exchange competitors that offer better commission conditions. Alternatively, pay attention to pairs that have promotional offers or reduced commissions on your chosen exchange.
As a separate point, analyze your emotional state during the trading period. Evaluate it on a ten-point scale and determine where the weak points were during the period, and where the strengths were. To recall the details of the month (if this period is chosen for summarizing), don’t forget to keep a journal and record your daily impressions and experiences.
The key thing to remember when making these records is to be crystal clear and honest with yourself. An objective assessment of the situation will help you make the right decisions and optimize your trading strategies and skills to achieve greater profitability in the future.
Algorithmic Trading – Automated Analysis
When it comes to algorithmic trading, statistics are typically provided on each platform that offers such services. Specifically, in our Burvix traders product on the Burvix.io platform, users can access all data for each trading pair – trading time, realized and unrealized profit and loss (P’n’L), as well as all executed deals over a specified period. This is precisely one of the advantages of algorithmic platforms, whereas manual trading requires these tasks to be performed manually. And, of course, one should not forget about the factor absent in algorithms – one’s own psychological resilience during trading.
Summing it up
In conclusion, the work of a trader is a journey of continual self-improvement. By embracing both automated analysis and mindful self-reflection, traders can cultivate the discipline and insight needed to navigate the complexities of the market effectively.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.
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