For example, within your trading plan you would include a step in your daily routine that requires you to visually analyze both your trading journal and
your account equity curve both before and after every trade you take.
For those of you trading with the MT4 trading platform, you can see
your account equity curve by opening up the «account history» tab within the «Terminal» window, then right click within the account history tab and choose the period of time you want to view and then click «save as detailed report», you will then see an equity curve along with a listing of all your trades for that period of time and some other useful information.
If you look at your trading
account equity curve, you see peaks and valleys.
When I review
my account equity curve, I try to find out the root cause of each severe drawdown.
Not exact matches
Equity Curve taking into
account daily prices, not just entry and exit.
The way to build your trading
account is to do it slowly over time; you hit a big winner here or there and it pushes your
equity curve higher, the key is that after these winners you have to be very careful and «tight» with your trading capital so that you don't give all your profits back... then eventually you'll hit another nice winner.
Traders who give in to short - term satisfaction are constantly experiencing very volatile changes in the
equity curve of their trading
accounts, this usually ultimately ends in disaster with a blown out
account.
The importance of having being a patient trader can not be emphasized enough, in fact, one could even say that there is a positive correlation between the
equity curve of your trading
account and the amount of patience you possess as a trader.
You need to really get interested in tracking your trading progress and in following your
equity curve, because it is this aspect of trading that truly defines and separates the disciplined and organized traders from the rest of the herd who continually lose money and blow out their trading
accounts.
The problem is that you will inevitably go through a period of drawdown, and risking too much will quickly ruin your
equity curve — if it doesn't blow out your
account altogether.
It takes consistent execution of the process of trading to achieve a consistently rising
equity curve; just like a sky scraper is built one section at a time, your trading
account is built one trade at a time.
The steepness of the
curves in this chart are driven both by the limitations of the 250 gigaton carbon equivalent budget and the need to take
equity into
account.