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A GOOD TRADE VS A BAD TRADE

The Good Trade Process

A good trader would do same analysis post market, some do it in the evening while the orders at night but the time of analysis does not matter. He searches for favorite setups time frame charts and look for potential opportunities. He takes down only those trades which qualify his risk appetite. Opportunities with 1:2 or more risk to reward ratio are normally good for consistent traders.

The trader sit patiently and wait for setup/strategy to complete and looks into lower time frame charts to fine tune his entry if possible. Discipline is followed for exits and stops, which are not moved (few expectations) after the trade initiated.

If the trader follows above tenets but a trade turns out to be a loser, i would definitely call it a good trade because he followed the right process. One needs to accept that in trading business one has no control over the result but the process.

Post analysis helps the trader to know his weakness. He note down his weakness after each trades and plans what he can do about it.

A Good Trade
A Good Trade

A Bad Trade

A bad trade is exactly the opposite of a good trade. None of the above traits are followed. The trader takes position chasing a breakout or trades a pullback because price are lower. No proper setups are followed are and risk reward ratio is poor.

Stops are moved when they are about to hit and profits taken before targets are reached. With this type of trading, the trader can not survive the market for long. Soon bursts his account. The trader is so desperate after watching his profit and loses that he can't even post analyse his trades in frustration. This only reflects that he is not learning, he just wants money. But the truth is that learning is an ever ending process in any field.

A Bad Trade
A Bad Trade

If the trading process is not followed but a trade comes out to be a profitable one, i will definitely call it a bad trade.

What Are Good Trades You Meant To Do?

If you have practiced restraint and followed the rules of trade, then give yourself a pat on the back! Know, at the end of the day, traders strive to achieve continuity in implementing sound trade process and your decision to abide by your rules is definitely a step in the right direction.

Even if you couldn't reap profits with your trade, as i mentioned earlier, you can just chalk it up to experience and learn from what happened. Find what went wrong, and decide if next time you need to make any adjustments. This learning experience may even help you to further improve your trading efficiency.

What Do You Have To Do About Bad Trades?

If you have broken one of your rules on trade entry, and your place is still free, get out while you can. You shouldn't be in that trade first place, after all!

When you are in the middle of a trade, don't immediately lose hope. Remember the situation can still be remedied by turning a bad trade into a good one. For example, if you break your risk management rule that says you should always stop, you can still fix your trade by adding a trailing stop based on your rules.

Trading Performance

One should never judge his trading potential just on the basis of few losing trades. Losses are part of trading business. Few losing trades are just part of those thousands trades that one will take in future.

So with the right trading process, the chances are rare that a trader ends up as a loser after those few thousand trades. For that one surely need to assess his trading strategy and psychology at least every three months, for early improvements.

Hope above information from my experience will help some traders to overcome failures and other to improve their trading.

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Hope this post will enhance of knowledge of some traders.

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