Profit and loss tracking is a task that should be completed by all who trade binary options. Not only is this form of tracking important in regard to money management, it is also important in regard to pinpointing where success and failure is coming from. When you know what you’re doing right, those actions can be replicated. When you know what you’re doing wrong, those actions can be eliminated.
Not only should profits and losses be tracked, but so should the actual outcomes of each trade. This type of tracking can be broken down into various categories so as to provide additional details. Consider noting the type of trade that was selected, the expiry time, and any optional features that were utilized. By taking the time to compare this data, you’ll quickly be able to pinpoint the selections that are bringing in profits more often than not, or causing losses more often than not.
This data can also be used to spot strong or weak binary options strategies. It is wise to test all strategies in advance of using them within your platform, but if you’d skipped that step then trade tracking may provide you with clues as to whether a specific strategy is actually working as it should be. When the ratio of losses to wins is too high, changes must be made. Note that while it is possible to modify strategies in order to render them more effective, some methods are simply not solid and should be abandoned.
The vast majority of binary options brokers allow their traders to view the outcome of every trade in one place within the platform. It may or may not be possible to download this information into a spreadsheet for further evaluation. If the data must be manually transferred, and you have already been trading for a while, creating a fresh starting point is going to be the easiest route. However, if you do have the time, you may be surprised to find out just how much you can learn from the past data.
Some traders choose to perform these evaluations once a week, while others do so once a month. There is no right or wrong here, unless you are experiencing a high number of wins or losses. When things are going well, you’ll want to know exactly which trade parameters are performing well for you. If you’re dealing with a higher than average number of losses, it’s important to get to the root of the problem before your account funds are completely drained. Dealing with problems sooner than later may allow you to avoid any need to re-deposit funds into your trading account.
More detailed tracking typically produces better results. Even so, some form of profit and loss tracking is better than none. There is no need to wait until you notice highs and lows before you begin to record important data. The most successful traders are those who take a more balanced approach, avoiding any extremes as they make decisions in regard to each of their binary options trades.