Pre-opening your next trade in trading with one simple thing became one of my most useful habit: reviewing the previous trade. Earlier I used to think that I should jump on next opportunity as soon as one trade closes. But taking quick trades from market analysis is never good and it is always driven by emotions rather than logical decision.
After a profitable trade you can have exuberance. Trader may feel market playing in its favour and thus next position will also give profit easily. Similarly after a loss frustration may turn into excessive pressure of recovery. In both the situations next trade can be unnecessarily risky.
Isliye I then start the approach by checking a few basic questions before next entry. Why did I took last trade? Was it according to setup rules? Was result due to strategy or just market movement?
Just because agar trade profit mein close hota hai, doesn‘t mean the strategy is wrong. And if it is in profit, doesn‘t mean its perfect.
The purpose of a trade review is not to predict but rather to learn about our repeated mistakes. It can be used to curb our impulse trading.
The very first thing we need to review is the reason why we took the trade. If you can‘t even recall clearly the reason behind why you took the trade, it may be a red flag. Every position should have a predefined reason for taking it, such as trend continuation, breakout, pull back, support-resistance reaction, or a predetermined setup of a strategy.
Occasionally, a strong candle on the chart tempted me to take an entry in a ‘Mere experience’ account. At the time, the setup looked convincing, but when I would review the trade, I would realize that it did not follow my real rules.
Isliye main next trade se pehle ye check karta hoon ki kya current setup last trade ki mistake nahi dohra raha hai. Kya last trade FOMO ki wajah se aayi thi, toh next position main jaldi lena iss problem ko aur badha sakta hai.
Trade journal can make this process easier. For trade journal entry price, exit price, stop-loss, position size, setup and reasons for taking trade can be recorded.
The journal can show repeated patterns after some time. Losses may be due to some specific session.
Next trade se pehele ek aor zaruri check hai: Are you emotionally neutral? In trading, an individual‘s mental state directly influences ones decision and a trader who might be feeling loss might tend to be impatient. In similar manner as said above, reversed tendency can be observed.
After a loss in a simple system, any reasonably looking setup can look attractive in the chart. Your mind naturally seeks to recover the previous loss, but the market has absolutely no knowledge of this. The next trade should be independently evaluated.
Similarly, the overconfidence which follows the consecutive winning trades can be a problem. The trader can increase the size of his position or ignore his normal rules.
Isliye simple pause bhi useful ho sakta hai agla position se pehle. Khud se pooch sakte hain: “Agar pichla trade hua hi nahi to kya main ye current trade phir bhi leta?”
If the answer has been a bit ambiguous then it may be better to wait a little while.
In trading, it‘s not always necessary to take every opportunity. Sometimes, stepping away from the screen and a slight emotional reset can actually make a better decision. Clearing the emotional baggage helps to view the charts more objectively.
Risk ko check karna bhi ahem hai trade review ke baad. Eek next trade lene se pehle sirf potential profit dekhna kaafi nahi hai. Trader ko yeh bhi samajhna chahiye ke agar setup fail hoti hai toh uski consequences kya honge.
Effect of position size, stop-loss distance aur account balance ko combine kar ke consider kiya ja sakta hai. If during previous trade the loss was more than expected, then the next trade may be too risky to automatically increase the lot size to try and recover from loss.
In a simple experience, a very common mistake is that the trader thinks in mind that if he takes next trade in the same direction then he would gain from previous trade. The problem with this is that if he takes a position in the wrong direction next, then his losses may further increase.
It is more appropriate to decide risk according to current setup and existing rules rather than previous result, so decision can be taken accurately.
When the market is more volatile than usual, conditions are more uncertain, volatility is high or there is an imminent economic news release, that is an increased caution may be appropriate.
A one minute risk check might sometimes help avoid over-trading just before each trade.
My most important learning before the next trade is to wait is also part of trading. I used to think if chart is open then position should be there. But experience taught me that waiting for quality setup can help avoid unnecessary loss.
A simple pre-trade routine can be formulated. First, review the previous trade. Next, compare the current setup with your strategy rules, then check your emotion state for potential risk. Only take trade if all the conditions are met.
It does not mean that every trade will be profitable. No checklist can eliminate market losses completely. However predefined rules can help co-control impulsive decisions and repeated mistakes.
For me, the most valuable realization was that in trading, setting speed aside, consistency is what really matters. Missing a trade is a temporary setback but making an emotional decision can cause permanent damage to the account.
So before next trade just stop one minute and ask yourself: “Am I taking this trade due to my own rules or due to emotions from previous trade.
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