+500.2%
80,341 trades.
80,341 trades.
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Whats is your YTD % return?
- Thread starter stock_trad3r
- Start date
Quote from Richbynature:
How do you measure a trader's skill level?
Well I can't see any other method than to reduce the question to the total profit in terms of "pips" and the maximum drawdown in "pips" too.
This is then independent of:
1. Account size
2. Financial instrument traded
For example, on futures FX, the spread is (varies tightly around) 1 pip with commissions ~ 1/2 pip (at Interactive Brokers). Somebody else might be trading a small stock at CMC (deal4free) with a market spread of (let's say) 13 pips.
Now clearly it is going to be harder to make profits where the spreads are 13 pips (for example) or more. There will be fewer timeframes over which a profitable change in price is likely to take place.
So part of the skill of a trader is in choosing the right thing to trade (FX is comparatively cheap, cheap to me = small spreads compared to typical moves, in terms of pips).
The reason I suggest we should only talk in terms of pips is simply that everything scales to pips (through stakes) and spreads are fixed on each individual instrument.
Hence the skill of a trader should be more effectively discussed through discussion of statistics measured in pips. Stas might include:
1. Total profit (pips)
2. Largest drawndown (pips)
3. Analysis of profit per day / week / month / year to understand statistical distribution of wins / losses
4. I also like to know what % of trades 'make me the profit'. In most businesses there is a 'business winning' cost. For me I think of this as the trades which cancel out (ie all the losers, summed up through to the most profitable trades). Presently only 18% (the top 18%) of my trades 'make the profit'. Translated another way, 82% of my time while trading, in the market, is 'wasted'. This is because I don't have a crystal ball. Instead I use statistics. So I guess a higher value for this measure would also be a measure of success.
I reiterate a statistic that I think must be important: Warren Buffet has averaged 21.5% for 40 years - if you can match that (21.5%), then you are doing something right.
A few problems with this measure...
Suppose trader A trades F, a $8 stock, every day for a week and makes 100 cents (the minimum increment in stocks, equivalent to a pip in fx). Trader B trades GS, a $150 stock and also makes 100 cents. Who's the better trader?
Maybe measure cents per share traded to equalize the volatility of these two stocks. But suppose they both make 2 cents per share traded but trader A makes 10x as many traders as trader B. Who's the better trader?
If I told you I netter '74 cents' yesterday, would that mean anything?
Quote from lescor:
A few problems with this measure...
Suppose trader A trades F, a $8 stock, every day for a week and makes 100 cents (the minimum increment in stocks, equivalent to a pip in fx). Trader B trades GS, a $150 stock and also makes 100 cents. Who's the better trader?
Maybe measure cents per share traded to equalize the volatility of these two stocks. But suppose they both make 2 cents per share traded but trader A makes 10x as many traders as trader B. Who's the better trader?
If I told you I netter '74 cents' yesterday, would that mean anything?
That's exactly how I train the bootcampers on the opening only strategy.....tell me "how many cents you made, not dollars". Whether it's on 100 shares on day one, or 2,000 shares at the end of training...the consistency is important....we can always "dial up" the volume for more actuall $$.
Don
I used to track that stat from my openings too, but quit because it's meaningless. 10 cents on a $10 stock is a significant move, on a $150 stock it means nothing at all. Unless all your stocks have the same level of volatility and trade roughly at the same price, total cents is useless as a meaningful statistic.
That's exactly how I train the bootcampers on the opening only strategy.....tell me "how many cents you made, not dollars". Whether it's on 100 shares on day one, or 2,000 shares at the end of training...the consistency is important....we can always "dial up" the volume for more actual COMMISH!! $$.
Quote from riskarb:
That's exactly how I train the bootcampers on the opening only strategy.....tell me "how many cents you made, not dollars". Whether it's on 100 shares on day one, or 2,000 shares at the end of training...the consistency is important....we can always "dial up" the volume for more actual COMMISH!! $$.
Cost of doing business....if you can tell Goldman to stop charging me, I'll be forever in your debt. LOL.
Our pricing is actually geared that we would make more commish if we kept everyone trading less than 1,000 shares. So, we let our traders decide how much or little they want to trade. No big deal.
All the best, Mr. Indexarb!
Don
Quote from lescor:
I used to track that stat from my openings too, but quit because it's meaningless. 10 cents on a $10 stock is a significant move, on a $150 stock it means nothing at all. Unless all your stocks have the same level of volatility and trade roughly at the same price, total cents is useless as a meaningful statistic.
Of course I agree, but for initial training we keep stocks in the $25-$45 price range for the most part. I don't like the slippage from high price stocks...bid/ask too wide quite often. Just trying to show a meaningful improvement early on, it does wonders for the new trader's "psyche" to see consistency and (hopefully) a bit more net profits.
I do certainly respect your abilities, and especially your accurate record keeping...I wish I could instill that discipline in everyone.
Don
Quote from Don Bright:
Cost of doing business....if you can tell Goldman to stop charging me, I'll be forever in your debt. LOL.
Our pricing is actually geared that we would make more commish if we kept everyone trading less than 1,000 shares. So, we let our traders decide how much or little they want to trade. No big deal.
All the best, Mr. Indexarb!
Don
Just having a little fun. I am in a playful mood today. Have a great weekend everybody -- off to Patagonia's 50% outlet sale.
Quote from riskarb:
Just having a little fun. I am in a playful mood today. Have a great weekend everybody -- off to Patagonia's 50% outlet sale.
Always good to see everyone in a congenial mood here on ET.
Heck, half my office already went to the MGM Grand to play poker, LOL....cutting into my commish damnit! LOL....
Have fun, be safe this weekend everyone.
Don