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  1. #1
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    Evaluating your trading

    Hi everyone!

    Question that every trader asks himself from time to time can sound like this – «Is my trading good»? In other words, is it robust, does it have the edge, will it be profitable in a long run?

    Some naïve beginner traders say – «it’s very simple, if you earn money, your trading is good, if you lose money, your trading is bad». But it’s not that easy in a world of real trading – good trading does not necessarily correlate with short-term profits, bad trading does not bring profits in short-term perspective.
    Can you tell me – is this trading good or not if I show you distribution of profits/losses in picture below?

    Attachment 10031

    Of course, you may try to analyze this account statement and notice that 906 USD loss was accompanied by increased lot size, also you may notice series of profits (436, 703 and 575 USD), but you know what?

    We never know whether this trading is good or not if we don’t know whether these series of profits was a result of following trading plan or veering from it?
    So, here we come to basic principle of trading – short-term results don’t matter too much, they can be result of luck. Think about it – best trading systems are not providing profit all the time, worst trading systems are not providing losses always.

    Ok, but what if you don’t have rigid trading rules for entering and exiting positions? It’s reality for discretionary traders who use their judgement for making trading decisions.

    Is it really impossible to evaluate your trading using your profits/losses distribution?

    To answer this question, let’s divide trading styles on 2 parts:

    1. Trend-following trading approach:

    In this trading approach, trader expects to have small frequency of winning trades, but his profits are much greater than average loss. For example, it’s ok for trader to have 6-7 or more consecutive losses, then to cover it with 2 trades. His equity curve will look like shown below:

    Attachment 10032

    You see, that in this case trader has relatively small number of winning trades (maybe less than 30%), but he successfully covers his losses with 1-2 «home runs» (big swings). You see, in this trading style it’s not recommended to evaluate trading by short-term profit and we need more time to make conclusion – is this trading approach robust or not.

    2. Short-term trading:

    By short-term trading, I assume that one can either day trade or hold position overnight but still have small duration of average trade (1-2 days). Of course, the less duration of trade we have, the less is our average profit per trade. Yet In this example, we can expect to have better frequency of winning trades. And correlation between good trading and immediate results is much better for short-term trading rather than for trend-following trading or other long term trading styles.

    Equity curve in this case will look like this:

    Attachment 10033

    You see, here we can have about 50/50 distribution – in every second trade we can get profit or at least achieve breakeven point. Why not 70/30 or 80/20?
    That’s a dream of every trader – to have 80% of winning trades and also keep profit/loss ratio more than 2/1 (having average profit greater than average loss).

    But there are no hidden hacks and shortcuts in trading – if we improve our frequency (quantity of winning trades), we lose magnitude (size of our profit becomes smaller). Some traders are proud that they have almost no losses or 95% of winning trades, but size of their possible loss can destroy entire account. Market is hardly predictable in short-term perspective. I personally don’t think that we should chase for high frequency of winning trades. If I will be able to get 50% of winning trades and keep 3/1 profit/loss ratio, I would be in hog heaven.

    In short-term trading approach it's much easier to evaluate your trading by short-term results - the better you trade, the more winning trades you will have and vice versa. That's why personally, I prefer short-term trading approach, because I can keep myself on track and quickly reconginize that my trading has become defensive, too aggressive e t.c.

    Starting from September 2013, my own track record of results is shown below (Every week I put down result in pips in special Excel file):

    Attachment 10034

    You see, my profitable weeks are almost equal to losing ones - I don't have "home runs" except one trade on XAGUSD (Silver). But frequency of winning weeks (I had 2 times greater number of winning vs losing weeks) allows me to survive in the long run (and to get profit) without "killing trades". And, what is even more valuable, I can quickly recongnize when I'm trading poorly and correct my trading behavior.

    Good luck!

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    Last edited by Value trader; 04-21-2014 at 07:13 AM.

  2. #21
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    We need to evaluate our trade every period to make our trade more better and make our skill increased and make our profit increased too. We can our spot on good or bad side, so we can maximize our trade and make any skill upgrade if it neccessary for our trade.

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  3. #22
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    I always try to learn from threads of @value trader to understand how to cover quickly when momentum fades out and let the profit run if momentum is carried out through out the day. And It really has bring new innovation and trading ideas to my mind and since last 3 months or so, I have learn so many things which I was not even aware of .

    Thanks & regards

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  4. #23
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    money management in trading we also staleness tally the knowledge to job using the mart psychotherapy as fountainhead as we fuck a corking psychotherapy in this swop we will also hit to discover to psychoanalyze because after a bully transaction with the psychotherapy in this byplay is the move that should be we do if we essential to follow in this business realize skills that can acquire money in this class.

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  5. #24
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    Effectively through the knowledge We've experienced occasions when my personal tactic would likely provide myself revenue on 5-10 directly word options the other could possibly imagine they have observed the ultimate goal although in the future identical tactic would likely struck cease reduction on 6 directly word options, then I would believe the marketplace will be 1 big scam as well as my personal tactic will be pointless, although doing more study I ran across that will my personal income word options are still greater than my personal losese word options, my personal main problem seemed to be my personal whole lot sizing, mainly because seeing that my personal money increases it would be regular to raise my personal whole lot sizing and thus my personal earnings as well as loss could well be additiona money.

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  6. #25
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    Quote Originally Posted by lawners1791 View Post
    yes to work as hard as you can be. to gain of the better with the proper of the technicals by the past work of strategics compliance. and improves the way of life with the stable of constants with the good manage on running the longer of terms with the trading works with the good plan.
    [lang=ar]I do not possess any staying for deliberative in the forex market because I am a beginner in the forex market and trying for training and quality education and trying to follow all is new in the forex market and thereby best forex market too much, but I did not get to the stage of professionalism so held myself[/lang]

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  7. #26
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    I do not have a constant level in market of Forex because I am a beginner in the forex market and trying to train and a good education and I am following all that is new in the forex market and trying for training and quality education at the moment so I can most successful in the formation of high profits in the forex market in a short time

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  8. #27
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    I think it's a good idea to perform evaluation on our trading achievement. A trader who has trading journal, must be do this. But many of us never write our trading journal, however it doesn't mean that we can't evaluate our trading. Using target we can also compare to the achievement as an evaluation.

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    “Not everything that can be counted counts, and not everything that counts can be counted.”
    ― Albert Einstein

  9. #28
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    It will be a very good thing to be done if the trader can do it carefully and actively, it will only make the traders to locate the best trading system and still be very sure before he is taking the trades, this will only increase the earning and the security of the trading of the trader and avoid the gambling by the trader.

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  10. #29
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    My simple information, such as losing more than we gain, so as we can have a win, it's good, but we did, and also we can make a bigger profit per trade per greater trading losses you need to pay attention to, and if you lose the big, I analyze the market and also to protect the balance, a problem that we deal with it because I think you have to be careful

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  11. #30
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    This information is, in fact, that we have more advantage to lose and even more useful if we are, it is to ensure that the actual losses are usually either is the fact that the cost of victory to try to prevent their true already created by Wayne is not important, haze

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