Key Metrics Explained
Understanding the trading metrics that matter for improving your performance
Key Metrics Explained
TradeLogist calculates numerous metrics to help you understand your trading performance. Here's what each metric means and why it matters.
Win Rate
Formula: (Winning Trades ÷ Total Trades) × 100
Win rate tells you how often your trades are profitable.
Interpretation
| Win Rate | Assessment |
|---|---|
| Below 40% | May need strategy review |
| 40-50% | Normal for momentum/trend trading |
| 50-60% | Good for most strategies |
| Above 60% | Excellent (verify your edge) |
Important Note
A high win rate doesn't guarantee profitability. A trader with 80% win rate can still lose money if losses are larger than wins.
Profit Factor
Formula: Gross Profit ÷ Gross Loss
Profit factor shows how much you make for every dollar you lose.
Interpretation
| Profit Factor | Assessment |
|---|---|
| Below 1.0 | Losing money overall |
| 1.0 - 1.5 | Marginal profitability |
| 1.5 - 2.0 | Good performance |
| 2.0 - 3.0 | Very good performance |
| Above 3.0 | Excellent (sustainable?) |
Expectancy
Formula: (Win Rate × Avg Win) - (Loss Rate × Avg Loss)
Expectancy is your expected profit per trade.
Example Calculation
- Win Rate: 50%
- Average Win: $200
- Average Loss: $100
Expectancy = (0.50 × $200) - (0.50 × $100) = $50 per trade
A positive expectancy means your strategy is profitable over time.
Average Win / Average Loss (R-Multiple)
The ratio of your average winning trade to your average losing trade.
What It Means
- R = 1: Wins equal losses in size
- R = 2: Wins are twice as large as losses
- R = 0.5: Losses are twice as large as wins
The Relationship
Win Rate and R-Multiple work together:
- Low win rate needs high R-Multiple
- High win rate can work with lower R-Multiple
Maximum Drawdown
The largest peak-to-trough decline in your account.
Why It Matters
- Risk Assessment: Shows worst-case scenario
- Position Sizing: Helps set appropriate risk levels
- Strategy Evaluation: Large drawdowns may indicate strategy issues
Healthy Drawdowns
- Day traders: 5-10% maximum
- Swing traders: 10-20% maximum
- Position traders: 20-30% maximum
Sharpe Ratio
Formula: (Return - Risk-Free Rate) ÷ Standard Deviation
Measures risk-adjusted returns.
Interpretation
| Sharpe Ratio | Assessment |
|---|---|
| Below 1.0 | Below average risk-adjusted return |
| 1.0 - 2.0 | Good |
| 2.0 - 3.0 | Very good |
| Above 3.0 | Excellent |
Trade Duration
Average time you hold positions.
Insights
- Reveals your natural trading style
- Helps optimize holding periods
- Important for tax planning (short vs long-term)
Using Metrics Together
No single metric tells the whole story. Always consider:
- Win Rate + Profit Factor: High win rate with low profit factor may indicate taking profits too early
- Expectancy + Trade Count: High expectancy means nothing without enough trades
- Drawdown + Returns: High returns with high drawdown may not be sustainable
In TradeLogist
View these metrics in:
- Dashboard: Summary cards at top
- Analytics: Detailed breakdowns
- Strategy Reports: Per-strategy comparison
- Time Filters: See how metrics change over periods
Next Steps
- Equity Curve - Visualizing your performance
- Strategy Analysis - Compare your strategies