Choose your review day
Pick a time when you are not trading, such as your first day off in the month or a day when the market is closed. Avoid reviewing right after a big loss, when it is harder to look at the numbers calmly. About 30 minutes is enough.
1. Write down five numbers
- Number of trades: trades you closed that month
- Win rate: winning trades ÷ all trades
- Average win and average loss: total of wins ÷ number of wins, and total of losses ÷ number of losses
- Total profit or loss: including commission and swap. The spread is already in the prices you traded at, so do not subtract it again (see Count your monthly trading costs)
- How often you kept your rules: trades where “Kept my rules?” was yes ÷ all trades (see What to write in a trading journal)
With your win rate and your average win and loss, you can work out your average result per trade:
Average per trade = win rate × average win − loss rate × average loss
For example, with a 45% win rate, an average win of 30 and an average loss of 20 (in your account currency), it is 0.45 × 30 − 0.55 × 20 = 2.5 (a calculation example). In the break-even win rate calculator, enter “average win ÷ average loss” (1.5 in this example) as the reward : risk ratio to see the win rate at which you would break even (40% in this example). In this example, the average result per trade is slightly positive (the numbers are only an example).
2. Separate trades where you kept your rules from those where you did not
The total alone does not tell you whether a result came from your strategy or from breaking your rules. Split your trades by “Kept my rules?” and find the number of trades and the total profit or loss for each group.
- Kept my rules: 32 trades, +120
- Did not keep my rules: 8 trades, −210
In this example, the group that moved the total the most was the smaller one: the 8 trades where the rules were not kept.
3. Look for patterns
Check whether the trades where you broke your rules, or the days with losing streaks, have something in common.
- Time of day and day of the week: do they happen more at certain times? (The forex market hours tool lists each session’s approximate active hours in your local time.)
- How you felt before entering: do they come more often after feeling rushed, bored or frustrated, or overconfident after a winning streak?
- Busy days: on days with more trades, did you break your rules more often? (See How to notice overtrading.)
If you trade often, splitting “kept my rules” and “did not” further by time of day or by day can make patterns easier to see.
4. Your biggest drawdown and longest losing streak
Write down how far your account fell from its highest point that month (your drawdown), and your longest losing streak. The drawdown recovery calculator shows the gain you need to get back, and, with an assumed win rate and number of trades, the losing streak calculator shows how likely a streak of that length is.
If reviewing your trades feels distressing, or you find it hard to stop trading, you can talk to a support service where you live.
With few trades, do not jump to conclusions
With only a few trades in a month, results can swing a lot by chance. For example, even if your true win rate is 50% and each trade is independent, the chance that your win rate looks like 40% or less, or 60% or more, is about (a calculation example):
- 10 trades: about 75%
- 20 trades: about 50%
- 50 trades: about 20%
- 100 trades: about 6%
People tend to expect small samples to look like the long-run average. A 1971 study found that even research psychologists tend to think this way.[1] Rather than deciding from one month’s win rate that “this strategy doesn’t work” or “my trading has improved,” keep watching over several months. In a month with few trades, focus on how often you kept your rules and on your notes for each trade, rather than on your win rate. If you only trade a few times a month, you can review two or three months together.
Change just one thing next month
A review may show you several things you want to fix. Still, change just one next month. If you change several things at once, you cannot tell which one made a difference.
Write the change as an “if–then” rule. For example: “If I just closed a losing trade → no new trades for the time I set” (only an example, not a recommendation). In next month’s review, start by checking whether you kept that one rule.
- Trades / win rate / average win and loss / total profit or loss / how often I kept my rules
- Profit or loss when I kept my rules, and when I did not
- Patterns I found (time, feelings, number of trades)
- Biggest drawdown / longest losing streak
- The one thing I will change next month (if–then)
Sources
- Tversky, A., & Kahneman, D. (1971). Belief in the law of small numbers. Psychological Bulletin, 76(2), 105–110. https://doi.org/10.1037/h0031322