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I’ve long operated under the principle of always keeping the bat on ball. That’s because I’m always afraid of missing the trade that turns out to be the big winner.  Recently I had a look at my trading data and noticed something – when I run into losing string, they tend to extend over a lot of trades.

I’ve come to the conclusion that my trading process lacks “don’t trade” filters. My profitability will certainly improve with this kind of filter. Truthfully not all good-looking setups should be taken. Some of them should be let go.

Don’t get me wrong – this isn’t about trying to avoid losing trades. That’s a futile exercise. It’s about identifying and avoiding sub-par trades. By simply avoiding those the book looks completely different.

Reviewing your wins and losses

Trading Journal Nov 2024

The chart above shows the distribution of my wins and losses. As you can see the sub-par trades are clustered together. This is exacerbated by the correlation effect.

The point of this post isn’t just about my discovery of sub-par trades. It’s about the importance of keeping a trading journal and reviewing what that data tells you about your trading. And using those insights to improve your trading, and your process.

As we close off the year, I start my annual trading performance review process. I will have to work on how to identify these sub-par trades and the mitigations rules that might help to avoid them.

The long and short of it: Keep a trading journal and review what the data tells you about your trading

Traders share a peculiar characteristic: they’re fiercely competitive, but only with themselves. In practice this means that they see every outcome as an opportunity to learn, and they’re brutally honest about both their failures and successes. This also means that they’re hungry for knowledge. They don’t sleep easy with unanswered questions. And they’re seldom satisfied with just one answer.

Njabulo Nsibande is a founder of Village Trader, and Sakha Ingcebo investment club. His interest in trading began in 2016, alongside a rash of Instagram ‘fx traders’…

Find him on Twitter: @njabulo_goje.