Episode 021: The most important trading metrics

A lot of traders think of performance in terms of the dollars they’ve made or lost.

But knowing how to effectively measure trading strategies, portfolios and overall trading performance is key to long-term success.

The overwhelming number of statistics available in backtesting software these days is incredible, but…

Most of it doesn’t actually matter.

So, how do you separate what’s important from what’s not?

In today’s episode, we share the most important metrics we’ve used over the years to assess strategy and portfolio performance. Here’s what you’ll discover:

• The 2 main types of trading metrics you need to be aware of,

• Which trading metrics you should always keep in mind and which ones you can ignore,

• How to accurately measure strategy/portfolio performance,

• How SQN is often misunderstood by traders and how to apply it to strategies correctly,

• Why daily correlations can give inaccurate results and what to measure instead,

• How assessing system versus portfolio metrics requires two very different mindsets.

“The number one metric for any reasonable trader is usually net profit to drawdown ratio because that's what trading is about.” - Tomas Nesnidal Click To Tweet “When we go to the portfolio level, we really need to shift our mindset compared to the strategy level.” - Tomas Nesnidal Click To Tweet “As an advanced trader, you want to keep improving portfolio with position sizing. You want to start improving all the metrics through dynamic position sizing methods.” - Tomas Nesnidal Click To Tweet

Resources:

– If you’d like to learn more about the Breakout Strategies Masterclass, you can grab more info here.

Do you have any trading questions you’d like answered? Submit them here, and we may cover them in a future episode!

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