Liu Chuanzi said: "In these years of management work and personal growth, 'reviewing' is one of the tools that has benefited me the most."
Individuals learn to review: it can accelerate personal growth.
Teams learn to review: it can enhance the ability of the team to work together. At the same time, it allows the team to form an atmosphere of mutual learning, sharing knowledge and skills.
Organizations learn to review: it can continuously optimize and stimulate innovation.
Liu Chuanzi's success cannot be separated from reviewing, and similarly in the foreign exchange market, if you consult foreign exchange experts, they will all talk about reviewing. It seems that behind every expert, there is always the shadow of it.
The editor has always said that reviewing is an indispensable part of our daily trading. However, some friends have told the editor that they review every day, but the results do not seem to be very good, feeling that reviewing is meaningless.
So how can foreign exchange traders efficiently summarize the market in order to positively promote their own trading?
Now I'll share a story about a forex big shot who transitioned from a beginner to an expert, summarizing a set of beneficial review content and formats through long-term review training.
01 Market Overview
We need to summarize the trends of the trades we make every day or every period.
You can simply divide the market conditions into six situations: sharp rise, sharp fall, slow rise, slow fall, wide fluctuation, and narrow fluctuation.
At the same time, it should also be summarized:
Which period showed a clear trend,
Which period was oscillating within which range,
Which period had a shift in bullish and bearish positions,
How different volatility situations evolve,
What are the high-probability combinations between six situations
…
By summarizing the market over the long term, the ability to analyze the market gradually improves. The more summaries there are, the more sensitive one becomes to some of the regular patterns.
02 Data Refinement
There are two ways to refine data: one is to write in a notebook, recording daily profits and losses, the varieties traded, how many rounds, as well as the maximum loss and maximum profit data.
However, truly beneficial data statistics must be professional spreadsheets. Therefore, the second method is more recommended.
A set of Excel spreadsheets can be formed through long-term trading training and practice.
You just need to import your transaction records, and it will automatically generate all trading data, including profits and losses, transaction fees, win rates, profit-loss ratios, trading frequency, holding times for profitable trades, and holding times for losing trades, etc.
Benefits of data refinement
Through this data, a clear picture of trading can be outlined, and the causes of losses can be quickly identified.
Some losses are caused by a low win rate,
Some losses are due to a high proportion of transaction fees, which means too many ineffective trades,
And some are due to an inverted profit-loss ratio,
where the holding time for losses exceeds the holding time for profits.
These can be seen at a glance from data refinement.
If the varieties and volumes of open positions are fixed, the win rate, odds, and frequency within a certain period will determine the final profit and loss.
So the combination of these three rates is very interesting, there are many combinations of three rates that can make money, each suitable for different personality types of traders:
Low odds combined with high frequency and high win rate, thin profits accumulate; this is a typical scalping characteristic;
High odds and low frequency combined with an appropriate win rate is the characteristic of swing trading;
The certainty brought by this combination of low odds, low frequency, and ultra-high win rate is the highest, thus allowing for larger positions.
The win rate and odds of traders in the early stages of growth can both improve simultaneously, but after reaching a certain level, the win rate and odds become a seesaw.
Choosing high win rates and low odds or high odds and low win rates varies from person to person. Solidifying good win rates and odds and increasing frequency can boost profits, but if the frequency exceeds a certain level, it will lead to a decline in both win rates and odds, resulting in a loss.
03 Summary of errors and correct behaviors
Errors in behavior, such as:Not strictly stopping losses or stopping losses too slowly, increasing positions to make up for losses after losing, doing too much in places where it shouldn't be done, etc., these mistakes need to be listed one by one.
Correct behaviors, such as: being very resolute in stopping losses in dangerous places, executing firmly when the trend comes, etc.
Errors and correct behaviors should be listed in order.
By listing every day, you will discover where the repeated problems in trading lie, and what the correct behaviors that can lead to stable profits are.
There is also a method I call 'behavior table', which is to list out the common mistakes and correct behaviors one by one and make a table.
Corresponding to each item daily after the market closes, check off what you did, mark with an X what you didn't do, and then score; reward good performance and punish poor performance, regardless of profits and losses, only focusing on behavior.
04 In-depth Review of Major Mistakes and Major Successes
What is a big mistake? Losing a lot in a specific phase of the market is a big mistake.
Often, big mistakes are not caused by a single error; if adjustments are not made after one mistake, it can trigger another mistake. Not acknowledging, not correcting, and repeatedly making mistakes will lead to big mistakes.
We need to analyze what caused the big mistakes:
It may be that the market conditions during this period do not match your methods, or it may be a series of psychological changes triggered by floating profits and losses.Similarly, we also need to analyze what caused the big profits:
Is it because the market flows smoothly or because the trading rhythm is well controlled? Or both?
Analyzing big mistakes and big successes focuses on examining whether one's behavior is correct or not, while big mistakes and big successes often correspond to ineffective and effective market conditions.
What we need to focus on reviewing are ineffective and effective market conditions, using screen recording software to record the detailed trading process and review it.
Which market conditions particularly fit the system, how to achieve big profits, look at it one by one, and belief comes from profit.
One must also properly review market conditions that are very destructive to oneself; what common traits do these conditions have, and what inappropriate behaviors are there?
After analyzing major mistakes, measures must be proposed, and these measures must be written down, to be reviewed the next day before trading. These measures must be highly feasible, and do not propose impossible solutions to oneself.
05
Refining advantageous situations
After you keep summarizing, you will find that in some specific situations, the advantages of making trades are particularly obvious, with both odds and win rates being very high.
Mature traders mostly only engage in specific advantageous situations, while letting go of those seemingly profitable but actually risky opportunities.
One of the paths to stable profits is to only engage in these advantageous situations and then increase positions within these advantageous situations to maximize one's strengths.
It is important to emphasize that review records should be frequently revisited. Different stages of reviewing notes will yield different insights.
06 Write while trading
The big shot also has a habit of writing while trading.
After encountering a particularly smooth trade: one will analyze the reasons for success.
After making a big mistake: one will immediately summarize how to avoid such mistakes in the future, and under what circumstances to trade cautiously, etc.
When trading conditions are between mature and immature: one will first write down possible trends and what conditions must be met to open positions, then observe whether the trends can slowly fall into expectations.
Trading itself is a process where the trend gradually approaches expectations, leading to trades that validate expectations, adjust expectations, and ultimately process them.
Persisting in this way can not only gradually improve predictive ability but also help control oneself from recklessly opening positions when conditions are not ripe.
Reviewing is the fastest feedback method for learning a task; learning emphasizes reflection, while blindly doing can only yield half the results for twice the effort.
Not understanding the key points, and not discovering problems through reviews before directly learning trading methods to improve is actually very foolish, like a person shooting basketball in the dark, unable to make progress.
I hope that through today's introduction, everyone can have an efficient review method, so that they can grow quickly and become experts in the forex market to gain profits as soon as possible through continuous summarization and improvement.
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