Updated from its original posting on 2012-06-01
We listed down some of the must-have stats in our lesson on trading journal statistics that all traders should take note of. This list includes items such as net profit, win percentage, payoff ratio per trade, and largest drawdown. Traders keep track of these variables and statistics to help them track their performance and identify areas for improvement.
Now, I’d like to focus on some of the other statistics that tend to be overlooked but can provide critical insight on one’s trading.
1. Holding time
Do you tend to hold trades for more than a day? Or do you only hold your trades open for hours at a time? Knowing how long on average you hold your trades will tell you what trading techniques and styles you’re most comfortable with, and it will help you determine whether you’re a short-term trader or a long-term trader.
Scalpers tend to jump in and out of traders very quickly, while position traders may hold on to trades for months or even years! Knowing which type of trader you are will help you make the proper adjustments to optimize your personal trading strategy.
2. Holding time of winners vs. holding time of losers
Now let’s go one level deeper and compare holding time of winners versus holding time of losers. Doing so will tell us whether or not we’re cutting trades too early or holding trades for too long. As much as possible, we’d like to avoid holding on to losers and low-yielding trades as they tie up precious capital!
3. Winners and Losers broken down by session
Another time-based metric that you can take note off is WHEN you actually trade.
Breaking down your trades into which session you are trading could help you determine the best session for you to trade. You might reside in Asia but realize that all your winning trades come during the London session. It might be advisable to clock in a few extra hours to squeeze those pips!
4. Winners/Losers broken down by market conditions
This metric will help determine whether you are recognizing the shifting market conditions and taking advantage of it. You will see whether you’ve been able to take advantage of the recent trend by hoping in on retracements or if you’ve been stubborn, getting burned trying to pick tops and bottoms.
It could also reveal your optimal trading conditions. If the metric shows that you’ve been having more winners in ranging conditions, it may indicate that you prefer to play consolidation behavior with support-and-resistance levels. Or if you’ve been making money by playing breakouts, it could mean that you prefer to trade the news or take momentum setups.
5. Winners/ Losers broken down by position size
Unlike the sports cliché, when it starts getting serious in forex trading, SIZE DOES MATTER. Keeping track of how big your positions are could provide valuable insight as to how you react when positions sizes change. It could reveal whether or not you are taking advantage of strong trends by increasing your size, or doing a poor job of recognizing choppy markets and not scaling down.
These are just some of the many performance metrics that traders tend to overlook. In the end though, it is up to YOU to decide which ones will be the most useful to you. Just keep in mind that the more detailed your trading journal is, the better the chances are of you determining what is the key difference between winning and losing.
Most importantly, you have to always remember to update your journal CONSISTENTLY and HONESTLY. Keeping a trade journal is a tedious task but it must be done because it is the only path towards improvement. Remember, the difference between an ordinary trader and an extraordinary one is that little EXTRA effort, done day-in and day-out!