Looking at your trading progress on a daily, weekly, or perhaps regular basis can sometimes be counter-productive, as it is easy to get obsessed about the natural drawdowns during the ebb and flow of your equity curve. You will have a certain target under consideration for your monthly profits, and if you're not reaching that target then you'll begin to overreach and make trades that you actually shouldn't be. It is perhaps best not to study your profit/loss figures too much except on a quarterly basis.
A quarter is a fair sample of information to have a look at, assuming that you make a mean of at least 5 – 6 trades per week; so after a duration of three months, you could have a good idea of how well you are trading.
A drawdown of say, six or eight % can often feel like the end of the Earth to new traders and can really dent your confidence, but these sort of drawdowns are a part of the trading process and must be viewed as a simply the price of engaging in business.
Of course, if your drawdown gets truly large in a single month,eg 15 or 20 %, then you really should begin to worry, as this would represent serious damage to your trading bank and you need to perhaps review your techniques and results to work out if you are doing something wrong.
In summing up, drawdowns of any nature are always tough to take, but with experience, they get easier to handle. When your confidence is grown over a long period of time, it takes more than a minor drawdown to seriously knock it, so be assured that as you get more experience, trading will get less complicated and less painful. It's so significant to control your feelings when trading foreign exchange, and experience and ‘screen time ‘ will help you to do precisely that.
Jay Gaskell is a staff writer for eForexSystemReviews.com, with a primary focus on supporting visitors who are looking to learn forex trading. Jay’s been trading for more than ten years now, and is mostly a ‘day trader’ on the mainstream forex pairs.
