So, you’ve been dipping your toes into the Forex pool and maybe even dived in headfirst. That’s great! You’re collecting data with every trade, essentially paying your school fees in the real world. Each trade, win or lose, is a lesson. And lessons, my friend, are priceless.
Now, looking at the piles of data can seem daunting. It’s like being handed a huge book with no idea which chapter to read first.
Here’s a little secret – not all chapters are created equal.
It’s like your old high school textbook; some parts are crucial for the final exam, others not so much.
Welcome to the Pareto Principle or the 80/20 rule.
Here’s what I mean.
Just about 20% of your trading data contributes to about 80% of your success. Makes life easier, doesn’t it?
So, what’s in that golden 20%?
Here are the four biggies to keep an eye on:
- Trade Volume: It’s not just about whether you win or lose; it’s also about how big the trade was. A win on a big trade is a more significant success than a win on a small one. So keep track of the sizes of your trades. You might see a pattern – do you win more with larger or smaller trades?
- Trading Pair: The Forex market is all about pairs, and not all pairs are equal. You might find that you have more success with certain pairs than others. Do you do better with USD/EUR or GBP/ZAR? Keep track of your successes and failures with each pair.
- Time of Trade: The Forex market is open 24/7, and the time of day can greatly impact your trades. You might find that you have more success at certain times of the day. Early bird or a night owl, when do you catch your best trades?
- Market Conditions: Forex isn’t an isolated system. It’s impacted by real-world events – financial news, geopolitical incidents, and economic indicators. A savvy trader keeps track of these factors and how they impact their trades.
Remember, the key here is not just to gather data but to learn from it.
Analyse your trades, find your patterns, learn your lessons, and make your next move.
You’ve got this!
