If you are an avid reader of the Sakurajima Stock blog, you will surely come across my post: Why do your trades often lose? In that post, I emphasized that the core of trading, one of which is the success of trading, is determined by the EVALUATION you do. So, the next question is: When is the right time to conduct an evaluation? And how often should I evaluate trades? This post will answer your questions.
Ideally, trading evaluations should be carried out as often as possible. That's why you should record every trading activity every day, so you know your trading performance. Each time you finish trading, evaluate your trades.
If you lose, what causes you to lose? If you make a profit, why do you make a profit? Is it because your technical analysis is correct, or did you profit by chance, or just because someone else followed suit? Did you profit just because the market was bullish at that time?
Meanwhile, when it is bearish, there are many cut losses? If your trading performance is in shambles, you have to look into it, why is your trading erratic? You have to evaluate it regularly. So, when you are profitable, you are not easily carried away by euphoria, and can still focus. But, it is even more ideal if you also evaluate trading at the end of each year. Usually, I call this a big evaluation.
"Brother Heze, if you have periodic evaluations, why do you have to do all year-end evaluations?" Ask you
The year-end trading evaluation helps you see your overall trading performance record. So, it will be easier for you to evaluate your overall trading performance. I mean, by looking at your overall performance record, all your mistakes can be seen very clearly, so you don't have to repeat the same mistakes next year.
For more details, I will describe a little evaluation that I have done. A few years ago, I was able to make a huge profit in trading. But unfortunately I did a lot of cut losses, and I was overtrading. If I was already euphoric because I got a big profit even though the overall trading performance was not good at all, then the following years would be very dangerous for my trading career.
Therefore, I started to evaluate at the end of the year to fix my entire trading system. Slowly, I can be more calm in doing trading analysis, without having to overtrade, without having to constantly cut losses.
This is where I finally conclude that trading evaluation should always be done. Now, how about you? Have you done a trading evaluation?
