One of the questions that is often asked by traders when joining forums or communities is the parameters of success. Questions like these are quite important and maybe they can be answered in this article session that we are reading. Every trader who has just been in the trading world is always worried about what they are doing, so they often ask themselves whether their trading strategy is right and appropriate? Or is it just a temporary benefit? According to general standards, the parameters of success in the world of trading are determined by the name "Win rate" or if in the Indonesian sense it is "Percentage of victory". Every trader has their own method of trading, so their winrates are also different,
According to David Jenyns "Professional Trader", he explained that in the world of trading there are parameters of success or commonly referred to as profit benchmarks. He is an expert in making profitable trading platforms and has worked at Ord Minnet's top broker and has written many experiences in a book about trading systems. Maybe, with the parameters of the success of this trading, enough to give you a little knowledge when becoming a professional trader later. Please see the information below.
1. Penentuan Win- To- Loss “ WinRate “
The main parameter that determines success in the tradung world is your winning performance. In simple terms, we must know that the win-to-loss ratio is defined as the ratio / average which is win vs. loss. If the trading system shows a higher win ratio than loss, then congratulations you are on the right and effective path to become a successful trader. However, it is also important to remember that these statistical calculations are not really accurate and accurate. Because win-to-loss can also consider how much win and loss we've ever gotten so far. So, the amount of win does not necessarily offset our loss figures or vice versa.
2. Average losses and average wins
Average win and Average Loss are almost similar to the first parameter, you can be sure here exactly that the value of pips or dollars at that time wins is greater than the average of losses. For example here is a backtest which consists of 200 trades, if you lose 150 trades and only win 50, then obviously your win to loss ratio of 15: 75 which means it's not good enough for you. Whereas as long as the backtest 200 trading is win to loss (150: 50), you have correctly run a trading strategy and we hope it continues to be carried out in a disciplined manner. An easier example, for example average win is $ 1000, while average loss is $ 500, the profitable system obtained is (50 x 1000) - (150 x 50).
3. See Expectations for reference
In the world of trading, expectations are always the main reference of a trader in confessing success in the trading system. Because performance in trading can be done comprehensively with a calculation formula that is more accurate and effective. Examples are:
(% Win x Average Win Size) – (% Loss x Average Loss Size)
Where, if a system has around 80% can get a win around $ 100 and the 20% loss gained is $ 1000. Then the expectations that you should make reference here are (80% x $ 100) - (20% x $ 1000) or more easily $ 80 - $ 200 with the final result - $ 120. If you use an ineffective trading system, this will be your biggest loss. As for the better calculation, if the chance of winning is 20%, you will get $ 1000 and lose 80% will get a $ 100 loss. Then the final result is + $ 120. This will be your biggest win. Well, you must understand about calculations like this in the world of trading, especially if you want to succeed in the future. This is the third parameter that you must understand.
In short, if the above explanation indirectly provides a picture or expectation of generating some of the dollar returns that you expect from every dollar that is "risked" in a trade. If your expectation is + 120 $ then you can expect the average return 120 times the capital you use in trading. The numbers above are only for illustration, in fact not all traders can make the right expectations until this moment.
4. Maximum consecutive losses "Maximum Consecutive Losses
The next parameter that you must understand in the world of trading is based on your test results of the losing streak that you have experienced from the beginning of trading until the day. It is also quite important to know by all traders because based on statistical data, it can provide confidence and confidence when experiencing los repeatedly. What's more, in this way you can measure well the success in the tradinng world. Let's take an example for this parameter, first if you face about 5 or 6 times the loser, you can think that the trading system is wrong, because here you don't know the maximum amount of loss that you get. Meanwhile, trading system los reached 10 times can still still provide profit, and this is rarely realized by novice traders.
5. Maximum Drawdown
The next parameter that can be used to determine success in playing forex trading is Drawdown which has the understanding as the worst period of "plummeting" in your trading performance. Regardless of the loss you experience at one time. These statistics are usually calculated automatically if you associate with some account analysis tools such as MyFxBook. After that, the number obtained can be a question for yourself, is it comfortable enough with drawdown like that? If you say no, maybe you can plan from the beginning again.
6. Number of Traders (opened trading positions)
Finally, the success parameters of a trader can also be seen from the number of positions that they open at one time. A good trading system should not give signals too rarely or often, the numbers must be equal so that you are able to open realistically. If you see a trading system with too many signals, then you must be forced to choose some of them that are truly effective in providing profitable.
Now that's some profit patamater of a successful trader. Hopefully the above explanation is able to understand you well. That is all and thank you.