The only way to see how to turn a losing or borderline profitable forex trading system into a winning one is to record all of your trades. It does not make any difference whether you are trading in the real market, in demo or even back testing.
Having a clear and comprehensive record of every trade is the only thing that will make it possible to see where your system is succeeding and where it is failing.
Then all you have to do is look for a way to eliminate some of the losing trades, and your profits go up, possibly doubling or even trebling without any need for additional trades or systems.
Your tracking system does not need to be complex of difficult to administer. Most traders use a spreadsheet to record their trades. You will keep this on your computer of course but you may also want to print out a blank one to fill out as you trade each day.
It is usually quicker to fill out you chart with a pencil while you have the information on screen, than to switch into Excel and type the right figure in the right space on your spreadsheet.
The first thing to note is that if you use two or more different trading systems, you need to record them on separate spreadsheets so that you can see which need attention and which are doing fine and should not be messed with.
They may also rely on different indicators so you will need different column headings for your various systems.
As well as the opening and closing prices and profit in pips, there is other information that you should record.
You will want your position size, costs (spread, fees etc) and the actual profit and loss in dollars (or the currency that your account is held in). This will help you see if you could increase your profits by changing your position on different types of trades.
You may also want to record the specific signals that made you open the trade. For example if you have a system that relies on the stochastic being in the highest or lowest quintile (above 80% or below 20%) you can record the exact point that it was at when you decided to open the trade.
There is one more thing. Very few traders do this but it can be helpful to just note the levels of the stop and limit orders that you set, even if they were not triggered, plus how close the price came to untriggered orders and how far it went beyond triggered orders.
So if the trade was profitable, you would know how close the price came to triggering your stop loss before it headed back in your direction and you closed at a profit. You would also know how far it went beyond your limit order (how much more profit you could have made with a higher target).
For a losing trade you will know how close the price came to your target profit before turning back and triggering your stop. That information could be very valuable if you start to have the impression that your system would do better if stops were further out, for example. You actually have the facts there to support your theory or prove it wrong.
Of course, you need information about a large number of trades before you start tweaking your forex trading system.
Never start messing with a system just because it had a couple of losses in succession, or had a bad month.
It is best to have full information on at least a hundred trades, maybe more, before even starting to think about looking for a pattern in the losses.
Many traders waste a lot of time looking for more systems and more trades, trying to increase their profits by finding extra profitable trades.
In fact you can do the same thing much more successfully by simply weeding out some of the losers.
This can make all the difference between profits and losses in the long term without requiring you to find a new forex trading system.
