There are amny different ways to calculate profitability percentages when you start looking at winning and losing trades. I am sure there are a myriad of opinions out there. I would however like to present a simple concept that would greatly impact the calculation of the Winnwer % and loser % and average winner/average losing trade calculations done on the trade summary screen.
Trades that "break Even" or that exit the market with a net change of "0.0" dollars, in other words...no profit and no loss, are not winning trades.
With my last thirty trades the summary shows a 50% win ratio when this is not the case (I do not have commissions being calculated in the trades)
In Actuality I had:
15 losers
5 Break Even
10 Winners.
When I divide the Gross Profits by the actual winning trades (EXCLUDING the Break Even trades) I get an average winning trade of $73.80
When I divide the Gross Profits by the number of trades that did NOT lose money (the way it seems that ninja does it now) I get an average winning trade of $48.67
I think, and I am sure that many many many others would agree with me, that there should be three trade classifications for the purpose of the summary.
1 - Winners
2 - Losers
3 - Break Evens or Flat Trades
This assists greatly in the analysis and improvement of a traders trading methodology when the winning percentages are calculated in this manner using the number of winning trades and not both winning trades and break evens!
To take this a step further I know a significant number of traders that call a +1 or -1 tick trade (or a 0 tick trade minus the commission a Break Even trade) for the purpose of calculating the true profitability of a trading method.
When you calculate the numbers correctly ignoring/subtracting the Break Even Trades from the calculation I have a 40% winners and 60% losers ...not a 50% winners and 50% losers as reported by NinjaTrader
If I remove the one tick profits or 1 tick losses (usually caused by slipage..this value could be set as a user preference) then in actuality I have only 5 winning trades and 10 Break even or "minor losers" and 14 losing trades!
Wow...now that does not look so good does it! 5 significant winners to 14 significant losers. In reality ...that is the real number that actually counts for me! The Break Evens and the one tickers are useless noise that skew the true numbers.
Now calculate the average profitable trade based on the real 5 winning trades: Average winning trade $146.-
Now calculate the average losing trade based on the real 14 losing trades ignoring the one tick slippage trade entries: Average losing trade $72.14
So realized risk to reward is 2:1
The ratio of winners to losers is 5:14
Now that paints a totally different picture and I really wish you would consider the option of allowing the user to break trades into a "Flat" or "Break Even" category on your summary page.
Additionally It would be wonderful to have the ability to define Break Even Trades or Flat Trades as trades with gains or losses + X or - y
Then I can filter out the trash and really see my important numbers.
Thanks for the consideration.
Trades that "break Even" or that exit the market with a net change of "0.0" dollars, in other words...no profit and no loss, are not winning trades.
With my last thirty trades the summary shows a 50% win ratio when this is not the case (I do not have commissions being calculated in the trades)
In Actuality I had:
15 losers
5 Break Even
10 Winners.
When I divide the Gross Profits by the actual winning trades (EXCLUDING the Break Even trades) I get an average winning trade of $73.80
When I divide the Gross Profits by the number of trades that did NOT lose money (the way it seems that ninja does it now) I get an average winning trade of $48.67
I think, and I am sure that many many many others would agree with me, that there should be three trade classifications for the purpose of the summary.
1 - Winners
2 - Losers
3 - Break Evens or Flat Trades
This assists greatly in the analysis and improvement of a traders trading methodology when the winning percentages are calculated in this manner using the number of winning trades and not both winning trades and break evens!
To take this a step further I know a significant number of traders that call a +1 or -1 tick trade (or a 0 tick trade minus the commission a Break Even trade) for the purpose of calculating the true profitability of a trading method.
When you calculate the numbers correctly ignoring/subtracting the Break Even Trades from the calculation I have a 40% winners and 60% losers ...not a 50% winners and 50% losers as reported by NinjaTrader
If I remove the one tick profits or 1 tick losses (usually caused by slipage..this value could be set as a user preference) then in actuality I have only 5 winning trades and 10 Break even or "minor losers" and 14 losing trades!
Wow...now that does not look so good does it! 5 significant winners to 14 significant losers. In reality ...that is the real number that actually counts for me! The Break Evens and the one tickers are useless noise that skew the true numbers.
Now calculate the average profitable trade based on the real 5 winning trades: Average winning trade $146.-
Now calculate the average losing trade based on the real 14 losing trades ignoring the one tick slippage trade entries: Average losing trade $72.14
So realized risk to reward is 2:1
The ratio of winners to losers is 5:14
Now that paints a totally different picture and I really wish you would consider the option of allowing the user to break trades into a "Flat" or "Break Even" category on your summary page.
Additionally It would be wonderful to have the ability to define Break Even Trades or Flat Trades as trades with gains or losses + X or - y
Then I can filter out the trash and really see my important numbers.
Thanks for the consideration.
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