I remember it was about 2 years ago that I had one of my most major a-ha moments that resulted in me improving my trading results by leaps and bounds shortly after. And I’m sure it will be likewise for you if you take what I say to heart and let it really sink into you.
You see … during that time, I had a long string of wins and then some losses but no matter what, at the end of each month when I do a nett sum of my trades, I’ll come out with a loss. It just didn’t seem to make sense does it?
Well, let me explain with a really simple example. Suppose I have a string of 9 wins of 10 pips each and 1 single loss of 100 pips. Even with a win loss ratio of 9:1 in this case, I’ll still come out in the red simply because my loss wiped out all of my wins.
Pretty easy to understand isn’t it? Yet when you look at the result slips and trading journals of most traders, you’ll notice a pretty common pattern. It’s not that they are necessarily bad traders … it’s just that they don’t know how to eliminate their REALLY bad trades which make all of the difference.
I hope you’re with me so far. So here’s my suggestion to you even if you’re already in the green, go through your trading journal and sieve out your biggest losses. When you’ve found them, learn from them and why they actually ended up as your biggest losses. When you do that and actually learn from your mistakes, I promise you that you’ll improve your results by at least 10% before too long.