Trade reviews allow measuring performance which, ultimately, is essential for driving improvement. In day trading, an effective performance measurement process is key to reach goals and realise long-term success. It helps traders identify their strengths and weaknesses and sets benchmarks with the collected historical data. Without measurement there is no control and it cannot be determined where the positive or negative performance has its origin.

Continuous trade reviews create a tracked period which illustrates a better picture of the performance than individual days only. Based on those periods re-occuring behaviour patterns of the market but also of oneself are easier to identify. It simplifies to identify cause-effect relations and eliminates the human factor – often things are evaluated subjectively, however, tracking the own trades and respective behaviour creates actual evidence helping to evaluate progress objectively. Based on those findings, existing rules can be adjusted or new ones implement to further develop the individual trading approach.

Ultimately, trade reviews and related performance measurement illustrate if what has been done works and if there are changes necessary in the trading approach. It is important that the trader creates a transparent picture of the own trading behaviour in order to be able to analyse it holistically. Regular monitoring of overall performance helps traders distinguish what they think appears to be happening from what is actually happening with clear evidence. While providing a complete picture of the personal long-term performance it provides exact guidance of what needs to be adjusted in order to improve the result.

Factors that can be measured reach from hard data such as the market, setup, time, lot size but also soft data such as the environment around a trade that, ultimately, led to the execution. Those factors can be crossed referenced in to identify potential relationships between those data. Simultaneously, those measured data represent a reference for future results and can even have a motivational factor.

The post “How to do Trade Reviews” continuous that topic illustrating a sample review structure and a free Trade Review Excel tool.