I think it would be beneficial if we standardized how we report trading results on EliteTrader.
Every so often, someone will post that they made $1000, lost $800, etc.
Unfortunately, this only tells us 2 things:
1. Whether they simply won or lost
2. How much their personal P&L was affected.
Is this number gross, or is it net after commissions? Heck, it's easy to be gross positive when scalping, but you have to trade well to also be net positive. What was the position size? Making $1000 on a 100 share position is much more significant than making $1000 on a 750 share position. How many trades were involved? Was it just one trade? Or was it a series of trades?
Without factoring these questions into the number, the dollar amount alone is not helpful to readers.
For example, let's say a group of traders are all using the same strategy every day and want to compare notes. This can be very helpful to all involved, providing a gauge on performance. By reporting the results in a consistent, complete way, traders who use different position sizes can compare notes effectively.
I welcome feedback and discussion on this topic, especially suggestions for what would make the most sense. To start things off, I propose the following:
1. All numbers reported should be net after commissions, bullets, etc. Why? Because you can't deposit the "gross" amount in the bank. You earned what you earned. Anything else is just fooling yourself. In addition, consolidation and competition have made commissions fairly even across different firms.
2. All numbers should be expressed as points instead of dollars. For example, if someone earned $500 (net, of course) on a 1000 share position, they would say that they made either "50 cents" or ".50". So would the person would made $50 on a 100 share position. Their accomplishments are mostly equal, and should be measured as such.
What if a particular strategy involves a group of trades, either in one stock or a group of stocks?
1. Subtract commissions and fees from the gross
2. Divide the total shares by the number of trades (both opening and closing positions) to get an average position size.
3. Divide the net dollar amount by the average position size. This gives you the final answer.
So...what do you think? Would this be beneficial, or doesn't it matter? Do you agree with the proposal outlined here, or do you have an even better idea?
Every so often, someone will post that they made $1000, lost $800, etc.
Unfortunately, this only tells us 2 things:
1. Whether they simply won or lost
2. How much their personal P&L was affected.
Is this number gross, or is it net after commissions? Heck, it's easy to be gross positive when scalping, but you have to trade well to also be net positive. What was the position size? Making $1000 on a 100 share position is much more significant than making $1000 on a 750 share position. How many trades were involved? Was it just one trade? Or was it a series of trades?
Without factoring these questions into the number, the dollar amount alone is not helpful to readers.
For example, let's say a group of traders are all using the same strategy every day and want to compare notes. This can be very helpful to all involved, providing a gauge on performance. By reporting the results in a consistent, complete way, traders who use different position sizes can compare notes effectively.
I welcome feedback and discussion on this topic, especially suggestions for what would make the most sense. To start things off, I propose the following:
1. All numbers reported should be net after commissions, bullets, etc. Why? Because you can't deposit the "gross" amount in the bank. You earned what you earned. Anything else is just fooling yourself. In addition, consolidation and competition have made commissions fairly even across different firms.
2. All numbers should be expressed as points instead of dollars. For example, if someone earned $500 (net, of course) on a 1000 share position, they would say that they made either "50 cents" or ".50". So would the person would made $50 on a 100 share position. Their accomplishments are mostly equal, and should be measured as such.
What if a particular strategy involves a group of trades, either in one stock or a group of stocks?
1. Subtract commissions and fees from the gross
2. Divide the total shares by the number of trades (both opening and closing positions) to get an average position size.
3. Divide the net dollar amount by the average position size. This gives you the final answer.
So...what do you think? Would this be beneficial, or doesn't it matter? Do you agree with the proposal outlined here, or do you have an even better idea?