Creating "Flash Cards" to Improve Your Trading Skills

One strategy I've pursued in the never-ending quest to improve my trading skills is creating flash cards from screenshots of forex charts. These cards can help remind you of the key factors in winning (and losing) trades, so you get better at recognizing these patterns the next time they show up. Many successful forex traders reap their profits using finely-honed pattern recognition skills; in fact, this may be the most "intuitive" way to trade forex, and the more practice you get recognizing the right patterns, the better your odds are likely to be. Over time, your collection of forex flash cards will become an in-depth visual record of your trading history that you can for valuable insights.

Below are some examples of screenshots I took following winning and losing trades. This one shows the 5-minute CCI (Commodity Channel Index) and candlestick chart with 5 and 20 unit moving averages that I had open when I made a successful 8 pip short trade of the EUR/USD in August 2005:



And below we see an unsuccessful attempt to trade the EUR/USD short, using only the 5-minute CCI chart (I was using Woodie's CCI system at the time):



In this case, the clear lesson is that what seems like a valid signal -- that little downward spike the lower arrow is pointing to -- can often turn around in an instant and become a false one that loses you 11 pips and leaves you shaking your head in exasperation. In fact, this is a perfect example of the type of losing trade that eventually made me swear off the 5-minute chart entirely. Ah, memories.

All of these screenshots were taken on a rather geriatric Dell PC from the charts on Global Forex Trading's DealBook software. First, I'd hit the "Print Screen" key to capture the screen image I wanted, then I'd paste it into my Microsoft Paint program and crop it down until it just displayed the chart images I wanted. After that, I'd save the images into either my "Good Trades" or "Bad Trades" folder, and voila, my digital flash cards were complete. I could easily review them on screen, or print them out if I wanted a hard copy as well. On some of the cards, I'd also type in a few comments about the circumstances surrounding the trade -- whether I'd waited too long to enter or exit, whether I'd been indulging in an excess of wishful thinking (I usually had), and anything else relevant to that particular gain or loss.

If you're a chart-based trader, you may find these types of flash cards a valuable addition to your arsenal. They're a convenient record of what worked for you and what didn't, and by looking at them on a regular basis you can begin to intuitively recognize the patterns that will make or lose you money.