Traders track variables and statistics to help them track their performance and identify areas for improvement.
Common metrics include items such as net profit, win percentage, payout percentage, and largest drawdown.
Now, I’d like to focus on some other forex performance metrics that are often overlooked but can provide insight into an individual’s trading:
1. Hold the time
Knowing how long you hold your trades on average will tell you which trading styles and techniques are most comfortable for you, and help you decide whether you are a short-term forex trader or a long-term trader.
Speculators tend to get in and out of traders very quickly, while position traders may hold positions for months or even years!
Knowing what kind of trader you are will help you make the appropriate adjustments to improve your personal trading strategy.
2. Hold the time of the winners in exchange for the time of the losers
Now let’s go a level deeper (as in the beginning!) and compare the retention time of the winners versus the retention time of the losers. Doing so will tell us whether or not we are cutting trades too early, or holding positions for too long.
As much as possible, we like to avoid holding on to losers and low-yielding trades because they tie up your precious forex capital!
3. The winners and losers are distributed according to the cycle
Another time-based metric that you can notice is when you are actually trading.
Splitting your trades into whatever session you trade in can help you determine the best session to trade.
You may be based in Asia but you know that all of your winning trades come during the London session. It might be a good idea to sign up for a few extra hours to squeeze in those points!
4. Winners/losers broken down by market conditions
This metric will help determine if you are aware of and benefit from changing market conditions.
You will see if you are able to capitalize on the recent trend by jumping on the bounces or if you are stubborn, burning trying to pick the tops and bottoms.
It can also reveal your optimal trading conditions. If the scale shows that you have more winners in range conditions, it may indicate that you prefer consolidation behavior with support and resistance levels.
5. Winners/Losers broken down by position size
Tracking the size of your forex trading positions can provide insight into how you react when trade sizes change.
It can reveal whether you are taking advantage of strong trends by increasing your volume, or doing a poor job of recognizing choppy markets and not cutting back.
These are just some of the many performance metrics that traders tend to overlook. Ultimately, it is up to you to decide which one will be most beneficial to you.
Keeping a trade journal is a daunting task but it must be done as it is the only path towards improvement.
Remember, the difference between an ordinary forex trader and an extraordinary trader is that a little extra effort is done day in and day out!