| Every daytrader is looking to improve | | | | histogram that gives the winning probability |
| performance. Some are discretionary traders | | | | by elapsed time in the trade. |
| while others use a systematic approach. Both | | | | |
| can use some analysis to improve their | | | | Using this piece of information can improve |
| trading results. | | | | your performance in a couple of ways. |
| | | | Consider different trade entry rules that |
| Optimizing trade performance starts with | | | | don't commit your entire capital on the |
| analyzing past trade data.It is very | | | | initial signal. Use simple time checkins to |
| important to track every trade and its | | | | add size to your trade to reach your optimal |
| characteristics. After building a database | | | | trade size. It can be a simple as buying |
| the analysis can begin. The first step is to | | | | every five minutes as long as the trade is |
| sort the trades. An important first sort is | | | | alive. By staggering the entry, the quick |
| by winning and losing trades. Winners and | | | | losing trades will automatically have lower |
| losers share characteristics and careful | | | | size than your long winning trades. The |
| analysis will unlock better overall system | | | | average winner will improve as the average |
| performance. | | | | loser will decrease. This lowers the overall |
| | | | drawdown potential . It will also raise your |
| Two prominent characteristics of winning | | | | expected return. |
| trades are time and price. One of the most | | | | |
| important goals after a trade has been | | | | An old trading maxim is to cut winners short |
| executed is defining it's likely outcome. | | | | and let winners run. Knowing your time |
| Sorting previous trades can help accomplish | | | | performance data helps accomplish this goal. |
| this goal. Isolate all the winning trades and | | | | If you track the PL of your trades on every |
| sort by length of time in the trade until | | | | bar, it leads to another discovery. Graph the |
| closeout. Find the average time in the trade. | | | | results and look at the chart. The winning |
| Compare that number to the same calculation | | | | trades not only last longer but have an |
| with the losing trades. The winners have a | | | | upward slope. The losers will have a downward |
| longer average time than the losers. Losers | | | | slope. Employing a trailing stop will cut the |
| will tend to be quick. | | | | losers off but allow the winners to run by |
| | | | having a trailing stop below the winning |
| It seems like this piece of information is | | | | slope. |
| minor. But, it can be a powerful tool to the | | | | |
| daytrader. If you delve deeper into the data | | | | Analyzing past trades is the key to improving |
| in excel you can isolate a time frame that | | | | results. |
| defines when only winners survive. Create a | | | | |