They hate to lose, so they let their losses run hoping to cover at a market turn and cut their gains short, afraid to lose that small gain. This behavior, together with improper position sizing is the cause of failure in most of the traders. The second one is the firm belief in the law of small numbers. This means the majority of unsuccessful traders infer long-term statistical properties based on very short-term data.

There are two problems with this approach. The first one is that the trading account is constantly consumed because the trader is discarding the system when sits at its worst performance, adding negative bias to his performance every time he or she switches that way.

The second one is that the wannabe trader cannot learn from the past nor he can improve it. The advantage of having a diversified portfolio of assets is that it smooths the equity curve and, and we get a substantial reduction in the total Drawdown. That, I can assure you, gave me the strength to follow my system!. The advantage of three or more trading systems in tandem is twofold. It helps, also improving overall drawdown and smooth the equity curve, because we distribute the risk between the systems.

It also helps to raise profits, since every system contributes to profits in good times, filling the hole the underperforming one is doing. There are days when all your assets tank, but overall a diversified portfolio together with a diversified catalog of strategies is a peacemaker for your soul.

Even, evaluating the last 30 trades is not conclusive at all. And changing erratically from system to system is worse than random pick, for the reasons already discussed. No system is perfect. At the same time, the market is dynamic. This week we may have a bull and low volatility market and next one, or next month, we are stuck in a high-volatility choppy market that threatens to deplet our account.

We, as traders need to adapt the system as much as is healthy. But we need to know what to adjust and by how much. To gather information to make a proper analysis, we need to collect data. As much as possible. Thus, which kind of data do we need? To answer this, we need to, first look at which kind of information do we really need. As traders, we would like to data about timing our entries, our exits, and our stop-loss levels.

To gather data to answer the timing questions and the stop loss optimum distance the data that we need to collect is:. All the above concepts are well known to most investors, except, maybe, the two bottom ones. So, let me focus this article a bit on them, since they are quite significant and useful, but not too well known. MAE is the maximum adverse price movement against the direction of the trend before resuming a positive movement, excluding stops.

I mean, We take stops out of this equation. We register the level at which a market turn to the side of our trade. MFE is the maximum favourable price movement we get on a trade excluding targets. We register the maximum movement a trade delivers in our favour. Having registered all these information, we can get the statistical evidence about how accurate our entry timing is, by analysing the average distance our profitable trades has to move in the red before moving to profitability.

If we pull the trigger too early, we will observe an increase in the magnitude of that mean distance together with a drop in the percent of gainers. If we enter too late, we may experience a very tiny average MAE but we are hurting our average MFE. Therefore, a tiny average MAE together with a lousy average MFE shows we need to reconsider earlier entries.

We can, then, set the invalidation level that defines our stop loss at a statistically significant level instead of at a level that is visible for any smart market participant.

We should remember that the market is an adaptive creature. Our actions change it. Now All losing trades are mostly cut at 1. When this happens, we suffer a slight drop in the percent of gainers, but it should be tiny because most of the trades beyond MAE are losers. Analyze by Open time. Close time. Seconds Minutes Hours Days.

Trade type. Include Exclude. Show actual growth. Custom Deposit. Custom Analysis. Cancel Clear Analyze. Commercial use and spam will not be tolerated, and may result in account termination. Add files Trading record Demo GBP , Oanda , Technical , Manual , , Oanda fxTrade. Copy With Signal Start. In order to copy this system to your account with a monthly subscription fee, send an invite to the trader so it becomes available through www.

Once the system is available, we will notify you by email. Cancel Send invite. Info Stats General. TWR measurement is required by the Global Investment Performance Standards published by the CFA Institute.

Its distinguishing characteristic is that cash inflows, cash outflows and amounts invested over different time periods have no impact on the return. Loading, please wait Pips Units Change Percentage Profit Pips Export HTML CSV PDF.

Chart Growth Balance Profit Drawdown. Balance chart is private. Profit chart is private. No data to display. Trading Periods Goals Browser. Tip: Hold shift to select a period to zoom into. M1 M5 M15 M30 H1 H4 D1 W1 MN. Open Trades Closed Trades Events. Pips Profit. Growth Pips Profit Units. Winners Vs. Losers Longs Vs. MAE Vs. Trade Outcome MFE Vs. Trade Outcome MAE Vs. MFE - Winners Vs. Pips Gain Profit.

Trade Length: 19h 23m. Profit Factor: 1. A GHPR GHPR: 0. Data includes last transactions based on the analysed history. Trading Activity Open Trades 0 Open Orders 0 History 0 Exposure. Open Date Symbol Action Units Open Price SL Pips TP Pips Profit GBP Pips Swap Gain Total:. Change Profit Lots Pips. Monthly Analytics Other Systems by laneforex. Name Gain Drawdown Pips Trading Leverage Type demo Terms Privacy Site Map Site Map Calendar.

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Traders want to win. Nothing else matters to them; and they think and believe the most important question is timing the entry. O so they believe. The problem lies within us, not in the market. The truth is not out there. It is in here. There are a lot of psychological problems that infest most of the traders.

One of the most dangerous is the need to be right. They hate to lose, so they let their losses run hoping to cover at a market turn and cut their gains short, afraid to lose that small gain.

This behavior, together with improper position sizing is the cause of failure in most of the traders. The second one is the firm belief in the law of small numbers. This means the majority of unsuccessful traders infer long-term statistical properties based on very short-term data.

There are two problems with this approach. The first one is that the trading account is constantly consumed because the trader is discarding the system when sits at its worst performance, adding negative bias to his performance every time he or she switches that way. The second one is that the wannabe trader cannot learn from the past nor he can improve it.

The advantage of having a diversified portfolio of assets is that it smooths the equity curve and, and we get a substantial reduction in the total Drawdown. That, I can assure you, gave me the strength to follow my system!.

The advantage of three or more trading systems in tandem is twofold. It helps, also improving overall drawdown and smooth the equity curve, because we distribute the risk between the systems. It also helps to raise profits, since every system contributes to profits in good times, filling the hole the underperforming one is doing.

There are days when all your assets tank, but overall a diversified portfolio together with a diversified catalog of strategies is a peacemaker for your soul.

Even, evaluating the last 30 trades is not conclusive at all. And changing erratically from system to system is worse than random pick, for the reasons already discussed. No system is perfect. At the same time, the market is dynamic. This week we may have a bull and low volatility market and next one, or next month, we are stuck in a high-volatility choppy market that threatens to deplet our account. We, as traders need to adapt the system as much as is healthy. But we need to know what to adjust and by how much.

To gather information to make a proper analysis, we need to collect data. As much as possible. Thus, which kind of data do we need?

To answer this, we need to, first look at which kind of information do we really need. As traders, we would like to data about timing our entries, our exits, and our stop-loss levels. To gather data to answer the timing questions and the stop loss optimum distance the data that we need to collect is:.

All the above concepts are well known to most investors, except, maybe, the two bottom ones. So, let me focus this article a bit on them, since they are quite significant and useful, but not too well known. MAE is the maximum adverse price movement against the direction of the trend before resuming a positive movement, excluding stops. I mean, We take stops out of this equation.

We register the level at which a market turn to the side of our trade. MFE is the maximum favourable price movement we get on a trade excluding targets. We register the maximum movement a trade delivers in our favour. Having registered all these information, we can get the statistical evidence about how accurate our entry timing is, by analysing the average distance our profitable trades has to move in the red before moving to profitability.

If we pull the trigger too early, we will observe an increase in the magnitude of that mean distance together with a drop in the percent of gainers.

If we enter too late, we may experience a very tiny average MAE but we are hurting our average MFE. Therefore, a tiny average MAE together with a lousy average MFE shows we need to reconsider earlier entries. We can, then, set the invalidation level that defines our stop loss at a statistically significant level instead of at a level that is visible for any smart market participant.

We should remember that the market is an adaptive creature. Our actions change it. Now All losing trades are mostly cut at 1. When this happens, we suffer a slight drop in the percent of gainers, but it should be tiny because most of the trades beyond MAE are losers. In this case, we went from The result overall result was rather tiny. The Reward-to-risk ratio went to 1. These are a few observations that help us fine-tune our system using the statistical properties of our trades, together with a visual inspection of the latest entries and exits in comparison with the actual price action.

Other statistical data can be extracted from the tracking record to assess the quality of the system and evaluate possible actions to correct its behaviour and assess essential trading parameters. Such as Maximum Drawdown of the system, which is very important to optimize our position size, or the trade statistics over time, which shows of the profitability of the system shrinks, stays stable or grows with time.

This kind of graph can be easily made on a spreadsheet. This case shows 12 years of trading history as I took it from a MACD trading system study as an example. Of course, we could use the track record to compute derived and valuable information, to estimate the behaviour of the system under several position sizes, and calculate its weekly or monthly results based in the estimation, along with the different drawdown profiles shaped.

The point is, to get the information we must collect data. Save my name, email, and website in this browser for the next time I comment.

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MAE is the maximum adverse price movement against the direction of the trend before resuming a positive movement, excluding stops. If you have a low win rate, the simplest solution is to hold onto winners and try to extract more profit from the trades that do work out. The account is expected to make £ We also use third-party cookies that help us analyze and understand how you use this website. Hugh Kimura over at Trading Heroes shows you how he uses Evernote as his forex trading journal. By definition, new deposits will affect the absolute gain. New to forex?

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