A Good Trade Vs A Bad TradeThe Good Trade Process
A good trader would do some analysis post market, some do it in the evening while the others at night but the time of analysis does not matter. He searches for his favorite setups on higher 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 sits patiently and wait for setups/strategy to complete and looks into lower timeframe charts to finetune his entry if possible.
Discipline is followed for exits and stops, which are not moved (few exceptions) after the trade is initiated.
If the trader follows the 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 results but the process.
Post analysis helps the trader to know his weaknesses. He notes down his weaknesses after each trade and plans what he can do about it.
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 coz prices are lower. No proper setups are followed and risk reward ratio is poor. Stops are moved when they are about to hit and profits are taken before targets are reached. With this type of trading, the trader can not survive the market for long. Soon he bursts his account. The trader is so desperate after watching his PnL 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.
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.
Trading Performance:
One should never judge his trading potential just on the basis of few losing trades. Losses are part of trading business (but only if one is taking it as a business and not Casino ). Few losing trades are just part of those hundreds 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 hundred trades. For that one surely needs 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 the other to improve their trading.
Regards
