Ewart de Visser had a friend who “didn’t like the whole work thing” and started speculating on foreign currencies. When Ewart asked him how much he was losing in his first few months, his friend wasn’t sure, so they set up a spreadsheet to start tracking his trading performance. In the video below, Ewart describes how he used data to modify his friend’s trading strategy to prevent big losses, as well as the interesting benefits of being tracked by someone other than yourself. (Filmed by the Washington DC QS Show&Tell meetup.)
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Nice analysis and presentation. Two critical data points traders must also track are commissions and expectancy ((avg. winner * avg. win amount) – (avg. loser * avg. loss amount)). My win rate per contract is nearly 70% as well but my expectancy is currently below my commissions so the only person making money at the moment is my broker. The key issue in that case is trying to trade less frequently by taking only the most highly favorable trading setups. Here is an example of my recent trade metrics for the S&P 500 e-mini futures contract. The first image is a composite of all key profit and loss data points and indicates that my trading results are gross profitable and net unprofitable after commission costs. The second image is a running expectancy showing how I’ve become less gross profitable over time due to either a poorer win / loss trade result ratio or a poorer win trade amount / loss trade amount ratio (it’s the latter coupled with increased trading frequency and commissions)
Trying to become a consistently successful independent trader is extremely difficult. Independt traders mostly work alone although they do commiserate with each other via various social media such as Twitter. Trading shares many of the same psychological challenges faced by those pursuing any career requiring a high degree of skill development in an environment dominated by probabilistic outcomes – professional sports is a good analogy. Having a risk partner can certainly help but even large firms with significant risk management departments often fail. In the end, trading isn’t about money even though the results are measured in monetary denominations. Trading, like sports, is a “simple” activity (ball goes in the basket or ball does not go in the basket ~ trade works or trade fails) but trading successfully is an extremely complex synthesis of developed skills and a process that requires focused effort at all times.