In contract trading, losses are unavoidable, but many traders make losses meaningless. After incurring a loss, they either blame fate or turn a blind eye, never contemplating the reasons behind the loss. Those who can achieve long-term profitability understand how to leverage the power of reviewing trades to make each loss a stepping stone to profit. Wang Lu mentioned in her sharing that she has developed the habit of recording the logic of her operations and the reasons for mistakes after trading. It is this awareness of review that allows her to continuously optimize her trading system, ultimately achieving stable profits.
The core value of reviewing trades is to discover the 'invisible flaws' in trading. These flaws may be hidden in technical analysis, such as misjudgments of support levels; they may appear in capital management, such as exceeding position limits; and they may more likely stem from human weaknesses, such as chasing after prices due to greed or cutting losses out of fear. A complete trading log should include entry rationale, take-profit and stop-loss positions, actual execution conditions, profit and loss results, and emotional state, among other elements. Through review, you can clearly see: which losses are normal fluctuations within the system and which are due to human operational errors; which profits reflect the effectiveness of the strategy and which are due to luck.
Effective reviews need to follow a closed loop of 'problem-analysis-improvement.' First, accurately identify the problem: is it a signal recognition error, or is the stop-loss execution inadequate? Is it a mistake in selection, or is the leverage too high? Next, analyze the reasons in depth: if it is a signal recognition error, revalidate the indicator parameters; if it is an execution issue, consider how to strengthen discipline. Finally, develop improvement measures and implement them: for example, if emotional control is lost due to monitoring for too long, set fixed trading hours; if losses occur due to unfamiliarity with a certain product, remove it from the trading list.
Reviewing should also emphasize 'timeliness' and 'continuity.' Timeliness means spending 30 minutes after the market closes each day to summarize that day's trades and conducting a weekly summary to avoid problem accumulation; continuity requires long-term persistence, not interrupting due to profits, nor giving up due to losses. Behavioral finance research shows that investors who consistently keep trading logs have significantly higher annualized returns than the control group, which is precisely because reviewing allows traders to form a 'reflection-optimization' virtuous cycle. Over time, you will find that repetitive mistakes occur less frequently, the effectiveness of strategies increases, losses naturally decrease, and profits become more stable.
A more advanced review is a comprehensive backtesting and optimization of the trading system. When a strategy continuously incurs losses, it should not be simply dismissed; instead, historical data backtesting should be used to identify the problem: is it that the strategy itself no longer fits the market, or do the parameters need adjustment? For example, in a sideways market, the win rate of trend-following strategies may decline; at this time, the moving average parameters can be appropriately adjusted, or one can temporarily switch to a range trading strategy. Reviewing allows trading to transition from being 'based on intuition' to 'scientific,' turning every loss into an opportunity to optimize the system, ultimately achieving a long-term cycle of 'learning from losses and profiting from learning.'
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