The reason that you entered Forex currency trading is to make very good money, right? First thing you must do is to have a clear and written Forex currency trading system, preferably a proven one.
It is best if the decision points are defined in purely technical manner by your system, as any judgment calls (discretion) allow for errors that cost money through losses.
A Forex currency trading system is a fully developed process that is repeated over and over again.
In trading, your goal is make consistent profits, so the more consistent you do what you do, the more consistent your results. Consistency is on of the greatest benefits of having a Forex currency trading system, but you must take it one step further to really get the most out of it.
Many traders over the years that have developed and published very profitable Forex currency trading systems. Hundreds of traders have taken those same systems and not even come close to the creator’s success. There are specific reasons for this incongruence.
First of all, the creator back tested and refined the system during its development. That back testing built a level of confidence in the system so that when it came time to put money on the line, they could have the discipline to follow the Forex currency trading system, particularly during drawdown spells.
Secondly, the backtesting allowed the trader to practice with the Forex currency trading system that they had developed, thus improving their competence with it and the efficiency.
Thirdly, many “followers” only concentrate on making money, so they miss the critical metrics that make the bottom line what it is. Every Forex currency trading system has certain performance aspects to it. These aspects that have direct impact on its profitability, and most of all predictability.
The system creators kept their primary focus on the metrics, While the followers that don’t make money with the system may not even know that these metrics exist, let alone what to look for.
Fourthly the creators make money with their Forex currency trading system because they back test and analyze their system’s performance regularly, plus they track specific metrics over time. The goals of consistency and continuous improvement necessitate this practice.
While better than doing nothing at all, some traders will occasionally back test their Forex currency trading system. Most however only look at profit for the period back tested and miss out on the valuable information found in the proper metrics.
Recording and tracking the performance of your Forex currency trading system is absolutely essential to truly maximizing your profits.
For those wishing to truly make the most money possible with their system, tracking your equity balance is important, but regularly analyzing your system’s metrics is what will allow you to really get the most out of it.