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Analysis to your Forex trading. How to analyze your own trade?
In the process of learning to trade in the Forex market trader need to analyze their actions. To explain this need, apparently, nothing, because if you do not assess the results of their own actions, fail to understand how we effectively traded.
In Forex the person who is learning the trade, monitors the results, comparing them with the solutions that were adopted for transactions. So it is possible to identify gaps in private trade, to find serious errors that would fix them in the future, or to ensure that the chosen method of trading is not promising.
It would seem that you just have to see profit from operations or it is not, that's all. In fact, to make the right conclusions, you should first think about the conditions of evaluation results.
Analysis of Forex trading is associated with statistics
To draw conclusions about the quality of, for example, a trading system based on the result of the only deal - not the best solution. Many traders to trade analysis take into account the hundreds or even thousands of transactions. Can be taken as a statistical basis for evaluation of the system the only indicator - the number of transactions?
Assume that trader made 500 transactions. How do You think this is enough, that we could draw conclusions? Likely so, but there is a caveat. People could do as many transactions in one day, and very successful for his system (favorable market conditions).
Is that the same success in trading tomorrow, when the market will change, for example, of volatility? Probably not, which means that the number of transactions it is not enough to assess the system.
Try to approach the issue from the other side. Such parameter as the number of transactions could not satisfy our need, perhaps suitable time interval? Agree, it is early to make conclusions, when shopping system has brought us a profit in one day, but if we give the test for the year (even in history) and get a positive result, it will be possible to take the time as the basis of statistical analysis?
For example, we tested the system for a year and made a profit. After a careful consideration of the transactions becomes known that there were only 3 pieces. Of course, to evaluate the effectiveness of the system in three transactions impossible, because the error would be enormous. Perhaps this unprofitable system, but the trader was just lucky to get two of three trades profit and one loss, for example, have yielded a profit.
For an analysis of their trading in the Forex market need to take into account the number of transactions and the period of testing at the same time. What can cause attempt to evaluate the work of only one of the two options described above.
That you can use to analyze your trades
First, if You use the popular trading platform MetaTrader4, then You have access to the history of transactions. There you can view all the important data on each transaction effected in the account. However, to analyze positions in this journal is not very convenient, but comes to the aid of a script that migrates the transaction on schedule! Very convenient, because on the chart you will see all of your points of entry and exit, as well as results for each of the operations.
Second, pay attention to those statistics that are in the report generated in MetaTrader4. How to form a statement, and what useful statistical information it provides us - in the article on the link. Now will focus on the profit factor and the graphical depiction of the yield curve.
The first indicator is very important for understanding of the superiority of profitable trades over unprofitable, and the second helps to understand the dynamics of the trade, to evaluate how evenly the growing Deposit at the time of testing. This will help to avoid a situation where the test results are positive, but then it turns out that all the income was obtained, for example, for the first 4 months. tests, and the next 8 months. system, or "fused," or "stood still" (something like in the picture above).
In the process of analysis to your Forex trading, you should pay attention to the following factors:
• the number of transactions in the testing period (the more the better);
• test duration (the longer the better);
• the value of the profit factor (the more the better, but certainly more than 1.1);
• the yield curve (it is desirable that the duration of the test chart gradually grew);
• the ratio of the average size of profitable trades to the average value of losing trades (minor factor, but it can reveal deficiencies in accepted for the work of stop loss and take profit, for example, if the average stop times exceeds the average profit).
The number of profitable and losing trades does not matter in an absolute form. Much depends on the type of trading system, even if unprofitable position will be closed five times more than profitable, it does not mean bad work of the trader, because the average profit in this case may be 7 times higher than the average loss, for example.
These indicators can be analysed only in time, watching how they change after certain periods. So we can assess the General trend, which allows time to tweak the system settings, if you notice a worsening of results.
Stability - the purpose of professional traders. In addition, the consistently profitable trade already suggests that it is not an accident. If the results of testing the system You get a positive result, but the yield curve on the chart jumps around like crazy, and the profit factor here will be familiar with the unit, it will be a signal that would not rush to use this technique on a real Deposit.
|Category: Forex | Added by: (05.11.2017)