Is there ever a way to determine if things are a good or bad trade? Despite all the usual belief of traders that all losing trades are bad and undesirable while all winning trades are good. Obviously, whichever gives apparent gains would mean that it is a good trade. However, there is more to trading than just gaining money from your trades. Just because trade is not profitable in the Forex or CFD market does not mean it is already good. We know that it does not make sense at all but do not worry. We have broken down some of the reasons why gaining from trades does not necessarily translate to a good trade.
A “Bad” Winning trade
Okay, let’s consider a scenario where your rules in trading say that you cannot endanger more than 5% on a trade that you make. However, you see a scenario and set up that your USD/JPY can make a highly possible trade. Despite your trading rules, you proceed and you start getting ready for a 20% trade from your account instead of your usual 5%. You actually make money off that trade and you celebrate when in reality, despite the large profit, you are able to make a “bad” trade. You were probably lucky that your trade actually worked when the underlying concern in this scenario is that you broke your own rules. As soon as you start feeling like you can break your rules for trading will mean that you are putting yourself in a situation to repeat this and eventually, your luck will probably run out. Good gain but a “bad” way to win.
A “Good” losing trade
Let’s assume a scenario where your method will need a “going long” call when the 100 and 200 start crossing over and your random analysis hits an oversold section. You start analyzing things and you feel like it is a good decision to get in but hesitate at the last minute and you wait until your signals, based on your plans, start showing before you enter the transaction. You eventually get the green light and you finally go long. Initially starts looking good for you but at the very latter part, the situation turns against you and your stop-loss activates. Despite not being able to gain anything out of the trade-in terms of money, in fact, probably have lost a few, you have exuded a type of discipline that will ensure you a good form of Forex and CFD trading risk management that not a lot of people have. You should be proud of yourself for handling this losing trade.
What to do with “bad” trades?
If you have started breaking one of your trade plans but still have your position open, you have the option to get out while you can. Based on your trading plan, you are not even supposed to consider these kinds of situations. If you find yourself in the middle of a trade that you think is not going to go your way, never start losing drive as you might be able to convert the bad trade into a good one. For example, as you find yourself not following your risk management rules for trading, you are still able to fix this by putting a trailing stop according to your trading rules. If that is not an option due to you already closing a bad trade, take note of the bad trade you made so that you are not to repeat the same decision when you encounter it in the future. Having a solid, clockwork process is way more important than profit as the discipline will ensure better outcomes and a problem-solving attitudes in the future.
What to do with “good” trades?
When you have gotten into trades by following the rules you have set with utmost discipline, congratulate yourself! This is a feat on its own and is the key to becoming a great trader for Forex or CFD. The bottom line is, when you as a trader consistently execute your processes and make your decision according to the rules that you have set would mean that you are on to the right decision-making of a trader. Figuring out things when you run your rule accordingly will enable you to accurately tweak your strategy in the future as you go along with trading. This will enable you to map out your ways and will hopefully zero you into more successful trades..
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