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