When I make mistakes in trading, which means I deviate from my trading strategy, one of my favourite things to do is conduct an in-depth analysis to find out precisely what went wrong and why I acted in a particular way.
What was I pondering at the time?
What possessed me to think in such a way?
Was what I had in my head the right interpretation?
Should I revise the way I’ve been thinking?
What perspective should I use the next time I think about it?
How can I bring about the necessary shift in thinking?
What exactly was I experiencing?
Why was I experiencing such feelings?
Should I be Experiencing These Feelings? Regarding the operation of a market, is it driven by erroneous assumptions or notions that defy reasonable thought?
In the event that I am confronted with the same incident again, how can I adjust my emotional reaction to it? How exactly can that be accomplished?
In order to answer all of the questions presented above and bring about good change, you need to keep track of your sentiments and thoughts while you are trading. You also need to be aware of what is occurring in your head at all times.
If you believe that you have made a poor trade (based on process, not P/L), scribble down as fast as you can the thoughts and feelings that led to you doing the action. Do this whenever you believe that you have made a poor trade. After that, you may put that information to use throughout the process of reviewing your trades to see what adjustments need to be made to better your trading going future.