Today's Quote: “Do not look where you fell but where you slipped." - Proverb.

Learn from every mistake. Professionals use every loss to try to eliminate a mistake or a bad habit so that it never happens again.

Quite simply, this is one of the keys to trading. It does not matter if you are a two minute scalper or a monthly core trader. Imagine you were a manager at a large corporation. That was your job and you were paid a salary to do it. Many of you have been or currently are in such a position. Now imagine one week your paycheck is seven percent less than what it was the prior week. You ask your boss why, and he replies that it was due to poor performance on your part. The next week your check increases by two percent, but the next week it is down another eight percent, once again your boss says the reason was poor performance.

If this is how your employer treated you, it would be very difficult to improve. You don't know why your pay was decreased in a specific enough way to correct the situation. Week after week this goes on, and the amount of your paycheck is always a total mystery. While this sounds absurd, it is how most traders handle their own trading. If you have too many stop outs, you received a pay decrease. You know it was because you stopped out of too many plays, this is your poor performance. But why did the plays stop out? We're they good plays that were simply in the category of “some plays will stop out”? Were they strategies that are not in your plan? Were they strategies that even exist? Were they managed properly? Were the proper original targets and stops used?

You see, just like the employer that refuses to give you a performance review to identify your specific problems, the trader who never analyzes their trades is in the same situation. Of course the difference is, the trader is doing it to him or herself. The truth of it is there is a wealth of information left behind by most traders. There is something very unique and valuable in every trade that stops out. The unique thing is that this particular trade is one that you felt was worthy of your capital. It met your requirements for a trade and was managed by you. It is valuable because many of your stopped out trades will contain information that can help to improve your trading. If you committed errors or made any kind of mistake in the taking or execution of your trade, you can find it, identify it, and eventually eliminate it from happening in you trading.

Professionals take the time to do this analysis. If you eliminate even half of your mistakes, think of the difference to your bottom line.