# Monitoring your Trading Statistics

**Video Transcription:**

Hey, traders. Welcome to Video 11 of the Forex Beginners Course. This is

Cory Mitchell. And in this video, we are looking at monitoring your trading

statistics, brought to you by Investoo.com.So, trading requires more than just hammering keys and jumping in and out

of positions. You need to monitor your performance so you can see what you

do well, and what needs work. While there are many statistics you can

track, these three are the bare minimum.The first one we’re going to look at is your win percentage. This is how

many trades you win out of your total number of trades, typically over a

period of time. So, I’d calculate it at minimum over a monthly period. You

may also want to track it on a weekly basis but monthly, for sure. So, if

you make 100 trades in a month, 63 of them were winners, that means your

win rate is 63 divided by your total number of trades which is 100. That

gives you 63%.If day trading and you track it daily and you track it weekly and track it

monthly, this will allow you to potentially see market environments you

should avoid; or market environments that you do very well in.For example, you may see that your win percentage is extremely low on

Mondays, or on Fridays for example, when volatility is typically a little

lower. So, you may opt to be more selective on trades on those days, or

avoid trading them altogether. If you are losing every single Monday you

trade, don’t bother trading it — just trade the other days. You are

actually going to make more money by avoiding that one day, or a certain

time of day.So, the next one that we want to look at is the win-loss ratio. This shows

you how much bigger your winners are than your losers. You can have a very

high win percentage, but if your losers are big compared to your winners,

you could still be a losing trader. So, you could win 90% of your trades

but if you only make 1 pip on your winners and lose 10 pips on your 1

loser, you’ve actually lost money. You’ve made 9 pips on the winners and

you’ve lost 10 on the 1 loser. So, you’re actually down money.Your average, how we calculate this is simply your average win divided by

your average loss equals your profit factor. Ideally, this should be a

percentage. What we want to do is, let’s say you’ve made three trades

today. You have a 5% winner, a 7% winner. So, the average of those two, you

add them up and divide by two. That gives you an average of 6% that you

made on your trade — just that’s a huge gain, but let’s just pretend.And your average loss, let’s say you had one losing trade where you lost 2%

of your account. So, you’d take six divided by two and you have a profit

factor of three. You made three times as much on average on your winners

than you did on your losers.Basically, you’re adding up your wins for the day or if you want to do it

over the weekend, your wins over the week. Or if you want to do it by month

you’d add up all your wins over the month, percentage preferably, and

divide it by the number of winning trades. Add up your number of losses

over the day, over the week, over the month. Then divide it by your number

of losing trades. And you plug them into this formula to get your profit

factor. That number should be at minimum above one.If it’s one that means your average win was the same as your average loss.

So, if you made 10% but you also lost 10%, that means your profit factor

would be 1. So, basically your winners and losers are the same. That is

okay, but you’re going to need a high win percentage to make money.Ideally you want to be above one. If we look to the profit targets I

discussed in Video 10, you are going to have a profit factor of at least

1.6 or a win-loss ratio of at least 1.6, because your winners are always at

least 1.6 times your risk. So, if you’re risking 1 pip on a trade, you’re

making 1.6. Or if you’re risking 10 pips, you’re making 16 pips on the

winner.Basically, my average win-loss ratio should never be below 1.6 as long as I

stick to that strategy. And it’s typically going to be higher, because I’m

also getting on some of my position at 2.6, 3.6 times my risk; so my

winners are always going to be bigger than my losers.It may not be exactly 1.6, even though that’s what I put out, because

occasionally on an order you’ll have a little bit of a slippage so you

might make a little bit more on one trade; you might make a little bit less

on another, just due to where the trade executes. But mine is going to be

above 1.6 or higher, typically around 2.5 or so.That’s a good win-loss ratio. At one, as I mentioned, you’re going to need

to have a high win percentage. If you’re below one, you’re going to have to

have a very high win percentage in order to be profitable. If your win-loss

ratio is very high — so, let’s say you have a three to one or a four to

one ration, so this ends up being a four or a five, then your win ratio

doesn’t have to be quite as high.Another one you want to look at is just simply your profit percentage. This

is the percentage profit on your account capital, typically calculated over

the course of a month. The percentage reveals more than just a dollar

amount. I could say, “Oh, I made $10,000 this month,” and that sounds like

great. You made a great return — but until you actually know what account

value that was traded on.So, if you make $10,000 on a $2 million account that’s okay, that’s a 0.5%

return for the month — not very good for an active trader. That means you

are making about 6% a year, which you’re not going to be able to make a

living off of, so not ideal. But if you make that $10,000 on a $100,000

account, that’s a 10% return for the month, which is much more respectable.So, by knowing these stats you can catch others who are trying to mislead

you. Lots of Internet ads will try to sell you signal services, books, all

sorts of things based on some stats that they try to cloak in some mystery.

But you can use these stats just to kind of ask yourself some questions

about what they’re offering.You can also ask yourself these questions yourself, to try to catch

yourself when you’re trying to see yourself. You may for instance tell

yourself, “I’m a great trader. I’m a very high winner.” But if you’re

actually losing money at the end of the month, you’re not a good trader.

So, you’ve got to look at these statistics and they kind of give you a

baseline for how you should be judging your performance, and also ways to

improve it which we’ll get to in a moment.Let’s look at some of the ways you may mislead yourself or that others may

mislead you. The company may quote their dollar return but not the

percentage. So, for instance, you may see a banner that says, “I make

$2,500 a day,” but on what amount of capital? If you’re trading a million

bucks, 2,500 bucks a day is not…it’s okay, you’re making 0.5% but it’s

not extraordinary.But if you’re making 2,500 bucks on $100,000 account, that’s a pretty good

day. You’re making 2.5%. If you’re trading $50,000 account, that’s a huge

day. You’re making 5%. It doesn’t take long to rack up some capital and

make it 5% a day.So, it’s very subjective to what the amount of capital is, which the

percentage at least lets you know. It doesn’t let you know that they’re

trading this amount of capital, but it does let you know how they are

utilizing that capital. Are they utilizing it well, or are they making 1% a

day, 2% a day, 10% a month, 20% a month? It gives you more information than

just saying, “I make $2,500 a day; I make $100 a day; I make $10,000 a

month.”A high return begs the question, if you make this 2,500 bucks a day, let’s

say, and it actually is a good return — let’s say he’s trading a $50,000

account so you’ve made 5% on this day — you need to ask the question, “All

right, you said you made 2,500 bucks on this day. That’s a 5% return.”You also have to question, “What are the bad days? If you make 2,500 bucks

on a good day, hopefully your bad day is less than that, or slightly less

than that or about the same.”If you have a high win rate, you can make 2,500 bucks a day most days and

lose a little bit more on a bad day that’s fine, because if you make 2,500

on 4 days and lose 3 grand on the fifth, that’s fine. You’re still going to

be making money.But if you make 2,500 bucks for 4 days out of the week and then lose 20,000

on the fifth day, you’re in deep trouble. So, you need to ask yourself,

“What are the bad days?”High percentages; you’ll also see this very soften. Someone will say, “I

win 95% of my trades.” But always remember, if you can win 95% of your

trades and make 1 pip on 95 trades but on those other 5 trades you lose 100

pips, you’re going to get killed.So, always remember, if your losses are way bigger than your profits, it

doesn’t really matter what your win percentage is. You’re probably going to

lose money.And a lot of profits, some guys will take profits for one or two pips, but

you can on your losing trade, end up taking a huge loss. So, don’t always

just accept this win rate as something that you can rely on. You also have

to put it in the context of the win-loss ratio. So, if your gains are

bigger than your losses and you make 90% of your trades, you are

phenomenal.All three ratios should work in harmony. Your monthly profit percentage

tells you the story, like the basic story; whether you’re profitable for

that month. But your win-loss and win percentage can actually help you

isolate where you are having potential issues. So, one example would be if

you have high win rate but you’re still losing money, the problem is likely

in your win-loss ratio.So, if your losses are bigger than your profits, you have two options. You

need to reduce the amount that you lose on each trade. Or, you need to let

your profits run longer. So, as I mentioned in the last video, if I’m

risking 10 pips my profit’s always 16. That way I know my profits are

always bigger than my losses, and I know that my risk is defined.Letting profits run or cutting losses isn’t an arbitrary decision you make

on each trade or well in a trade. You need to strategize, create a plan;

how are you going to do this? So, whether it’s my method of the 1.6 times

risk…so, if you’re risking 10 pips you make 16 on your profit target.

Whatever that is, you’ve got to strategize it out, write it down, create a

plan and then stick to it.We’re going to look at creating a trading plan in a couple of videos. But

this is the process you want to start is thinking, “How can I actually fix

these ratios?” Don’t just go into a trade and then make all sorts of

changes within that. Instead, strategize. Think about it before, and then

do it for every single one of your trades.So, let’s just quickly go back. Let’s look at these again, so these are the

ones you want to look at: your win percentage; how many trades you’re

winning out of your total number generally over a month, a week or a day;

your win-loss ratio, so take your average win percent divide it by your

average loss percent. It gives you a profit factor that should be at least

greater than one.And your profit percentage is your monthly profit, or typically your

monthly profit on your account capital. So you would just add up how much

you made, divided by your account capital, to give you a percentage return

for the month. Ideally, we want that to be positive.Be aware of people who are trying to deceive you based on these stats, by

only giving you part of the picture. Also be aware when you try to deceive

yourself by saying, “I made 2,500 bucks today. I’m awesome,” but the next

day you lose 10,000. That is not a good win-loss ratio and is probably

going to lead to your account being decimated. So, keep these in mind and

think about strategizing how you can improve these ratios to improve your

overall monthly profit.Until next time, happy trading.

**WordPress database error:** [Table 'wp_investooprod.wp_icl_string_packages' doesn't exist]`SELECT CONCAT(kind_slug, '-', name) FROM wp_icl_string_packages /* From [www.investoo.com/monitoring-trading-statistics/] in [/nas/content/live/investooprod/wp-content/plugins/wpml-string-translation/classes/package/class-domains.php:34] */`