Monitoring a trade

Here’s what you need to know to monitor your positions and adjust them as needed.

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Well done, you’ve placed a trade! There are many tools to help you manage and monitor your positions, orders, and activity.

Learn more about:

  • The importance of monitoring your positions
  • Ways to evaluate your performance
  • Using alerts to stay informed

The importance of monitoring a trade

So you’ve placed a trade and likely put a lot of work into it, but that’s only the beginning of your journey. Often what separates a successful trader from the unsuccessful is what they do after they enter a position.

As a trader, it's important to review your trading performance in order to refine your process and improve your overall strategy.

When evaluating performance, context is key. You need to know 2 things: whether your position is on pace to meet your goals, and whether it has performed as well as comparable trades over a reasonable period of time.

How often should you review your performance?

There's no right or wrong answer to this question, but determining how often you will monitor and manage your investments should be a part of your plan. You can use your trading frequency as a lever to help you decide. For example, if you’re making short-term trades, you should monitor your positions more frequently. The key is sticking with your trading plan.

Take advantage of the tools on your portfolio summary to help you easily review your position details, balances, open orders, performance, and more.

Evaluate your gains and losses

You should have a plan for each trade before you make it, including what you’re trying to gain and what you’re willing to lose. Of course, circumstances can change after you enter into a position, and the market can move against you at any time. But essentially you should know your risk-return model for each trade.

Look at your overall profit or loss. And how does this compare to the profit target you set for yourself? If your profit level isn’t where you expected, reconsider how you decided on that target and whether it needs to be adjusted.

How many of your trades resulted in a gain versus a loss? Evaluate your trades. Look for what the winning trades have in common compared to what the losing trades have in common.

Let’s look at an example

Not every trade is going to be a winner, but don’t let that get you down. Instead look at the bigger picture. Do your overall gains outweigh your losses? If so, your strategy may be working.

Let’s say for example, you invest $500 on every trade and have a strict exit plan to stop your losses at $50 and cap your gains at $200. If you placed 10 trades and only 3 were right, assuming the full profit potential of $200, you would make $600 and lose $350 (7 trades x max loss $50) even though you lost more times than you won.

Stay informed about your investments

There are many ways to find and validate new trading ideas. For example, you can look at the news, consider the Equity Summary Score to get a sense of how analysts view a stock, and use fundamental analysis to understand a company’s strengths and weaknesses.

Using this information can help you make an informed decision to place a trade, but it remains equally important to help you monitor your investments. For example, a shift in analyst opinions on a stock could impact the price movement which in turn can impact your performance.

Know what you own, and continue to do your research to help better understand price movements.

How can alerts help?

You can't stay on top of your investments and the markets all day, every day. But, you don't want to miss an opportunity to exit a trade or buy or sell an investment when the time is right for you. Alerts can help. They notify you about specific stock movements, index readings, economic announcements, analyst rating changes, or other factors that could affect your trade. At any time, you can adjust open trading orders to help manage risk by setting new prices at which to buy or sell. Keep in mind, alerts are useful to help you stay informed, but don’t forget, having a defined exit strategy is one of the most critical parts of your plan.

Think about your approach

It’s not all about numbers. Go back and evaluate your trading plan—did you follow the decisions you laid out? Think about ways you can introduce and use different fundamental and technical indicators in your decision-making process.

Continue to be curious, keep reading, and be open to learning from your mistakes—they generally lead to improvement.

Key takeaways

  • It's important to review your trading performance to help refine your process and improve your overall strategy.
  • Have a plan for each trade before you make it, including your risk and return model for each trade.
  • Use alerts to help you stay informed, but don’t forget, having a defined exit strategy is one of the most critical parts of your plan.
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