Moving forward with some more advanced features of a trader’s page we find ourselves to the Performance Tab.
There are six different metric studies.
Before diving deeper into the three most important of these, let’s just give a brief description of the rest.
Closed Trades only
Simply put, it is the closed trades’ PNL for each month.
By Pair
This metric shows the system’s diversification (if any) and the actual weighted profitability for every financial instrument that is traded.
Ranking
The daily ranking for each trader. Stability is what we are looking for in this one.
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Having explained briefly the above three sections of the performance page we can now concentrate on the three core analysis charts that are going to provide you with an advanced tool case for filtering solid strategies.
At first, we can see the “Include Unrealized PnL” tab.
This shows the monthly PNL correlation between the Total and the unrealized PNL.
It is important to know and have available to you, the behavior of the unclosed positions of a trader and how he/she handles it during a consecutive month period.
Having a chart where there is some unrealized PNL is vital but not a prerequisite.
However having, every single month a massive PNL correlation between the total and the unrealized means that the trader is holding on to his trades too much, especially when the PNL has negative values.
The lack of a stop loss or a management strategy for drawdowns is a red flag in a system.
Tip: Pay close attention to the peaks and valleys of the chart, extreme values can sometimes act as support and resistance lines, and a new higher or lower value in any of the metrics might be a warning signal of a “break” in the trading algorithm.
“Trade volume” comes next.
Here we can see the total amount of monthly closed trades, separated into winners and losers (or breakeven).
Trade volume might seem like a lagging indicator however it is not.
It lets us know the cyclicality of a system, which are the “hot” months in action and which are not.
Generally, an investor should pay attention to an upward move of consecutive trade volume bars, especially with a fresh rising strategy. The reason behind this might be well-known trading mistakes such as overtrading, fomo e.t.c
A Volume chart should be in a long-term perspective “trendless”.
Finally and most importantly, we have the “Best-Worst” chart.
It cannot be stressed enough, but this is the tool with the highest value on the whole Trader’s page.
This is where the risk to reward ratio is visible in the most simple and comprehensive way.
It indicates which is the highest closed profit per trade, versus the lowest point in unrealized losses per trade for the day.
Our main objective is to observe the peaks and valleys from a long-term perspective.
A robust trading system does not “paint” new high and low values every month.
It might fluctuate between its extreme values but rarely violate them.
If so it should be deemed as a system with a lack of structure and R/R specifications.
Also by inspecting the above statistic we can instantly know if a trader uses a hard stop-loss strategy and take profit or manages its trades via grid or martingale-grid techniques.
In the above case, it is clear that the trader uses a grid strategy as its risk to reward remains relatively the same however the volatility changes dynamically based on the market’s one.
Below we can see a system that uses hard stop loss and take profit and quickly realize that this strategy might be more suitable for a portfolio with minimum funds and lower leverage.
Taking all the above into consideration, it is obvious that the performance tab is a “goldmine”, full of tools that can be proven vital in the trader selection process.
Through six different charts (with pips and USD data) the investor is able to know the tendencies of a system, its limitations, its extreme values, and most importantly its trading roots from which the final performance results are being derived.
Stay tuned! More to come!
Disclaimer
The views expressed do not constitute investment or any other advice /recommendation /suggestion and are subject to change. Reliance upon information in this material is at the sole discretion of the reader. Opinions expressed in the report do not represent the opinion of ZuluTrade Social Trading Platform and do not constitute an offer or invitation to anyone to invest or trade.
Every metric and the statistical number is a result of a past performance, which does not constitute a promise or a certainty for a future one.