Performance metrics
Win Rate vs Profit Factor: Which Metric Really Matters?
Why a high win rate can still lose money, how profit factor captures the full picture, and how to read the two metrics together to judge your trading.
Performance metrics
Win rate, profit factor, expectancy, Sharpe and the other numbers that tell you whether you have an edge.
Performance metrics
Trading Expectancy: The Formula That Tells You If You Have an Edge
How to calculate trading expectancy in dollars and in R, worked examples, and how to use expectancy to compare setups and decide what to trade.
Performance metrics
Profit Factor Explained: What Is a Good Profit Factor?
How to calculate profit factor, what values are good for day traders and swing traders, its limitations, and how to use it alongside other metrics.
Performance metrics
The Sharpe Ratio for Traders: What It Measures and How to Use It
How the Sharpe ratio measures risk-adjusted returns, how to calculate it from daily trading returns, what values are typical, and its limitations for active traders.
Performance metrics
The Sortino Ratio: A Better Risk Measure for Traders?
How the Sortino ratio differs from the Sharpe ratio, how to calculate downside deviation, and when the Sortino ratio gives a fairer picture of a trading strategy.
Performance metrics
Average Win vs Average Loss: The Ratio Behind Every Profitable Trader
How to calculate your average win and average loss, why their ratio matters as much as your win rate, and how to improve it.
Performance metrics
MAE and MFE: How Far Your Trades Go Against You and For You
Maximum adverse excursion (MAE) and maximum favorable excursion (MFE) reveal whether your stops are too tight and whether you exit winners too early. Here is how to use them.
Performance metrics
The Calmar Ratio: Return Compared With Your Worst Drawdown
How the Calmar ratio compares annual return with maximum drawdown, how to calculate it, what good values look like and when it is more useful than the Sharpe ratio.
Performance metrics
System Quality Number (SQN): Scoring Your Trading System
What the System Quality Number is, how to calculate it from your R-multiples, how to read the scores, and the pitfalls of using it on small samples.
Performance metrics
How to Read Your Equity Curve: 6 Patterns and What They Mean
Your equity curve tells the story of your trading. Learn to read slope, smoothness, drawdowns, step changes and flat periods, and what each one suggests you should do.
Performance metrics
Measuring Trading Consistency: Beyond Total Profit
How to measure whether your trading is consistent, using winning days and weeks, the share of profit from your best days, monthly results and streaks.
Performance metrics
How Many Trades Do You Need Before Your Statistics Mean Anything?
Why small samples mislead traders, how the number of trades affects the reliability of win rate and expectancy, and how to use Monte Carlo simulation to test your edge.
Performance metrics
Holding Time Analysis: Are You Holding Losers Longer Than Winners?
How analyzing trade duration reveals hidden habits, why many traders hold losing trades longer than winners, and how to use holding time to improve exits.
Performance metrics
How Commissions and Fees Eat Into Your Trading Profits
How commissions, exchange fees, spreads and slippage add up, how to calculate their impact on your edge, and practical ways to keep trading costs under control.