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How to Measure Your Trading Performance

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How to Measure Your Trading Performance

Learning how to measure your trading performance is as important as learning how to trade the market. It helps you avoid costly mistakes and interpret trading results and risks. Most traders don’t understand how to convert their performance into meaningful metrics and this has an adverse effect on their profit margin.


If you understand your metric, you should also understand that metrics are not just interesting statistics. If you want to build and guide your trading strategy development, monitor trading outcomes and diagnose potential problems, then you should measure everything conceivable when trading.

Tracking Trading Performance

There are three basic measures of performance every trader should note when measuring your trading performance. From Rate-of-Return (RoR) to DrawDown, and Sharpe Ratios, these measures can get overwhelming especially for new traders. If you are a beginner, focusing on metrics such as Win Rate and absolute ROR can be deceiving. However, there are three significant measures of performance that can guide your trading process and trading outcome for a positive result.

 

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