Analyzing Your Trades

Analyzing Your Trades
Here are some main takeaways and concepts to more easily analyze your own trading metrics.
(Please have at least 1 month of data following a single strategy to start analyzing.)
1. What is your P/L ratio? Ross personally aims for a P/L ratio above 2:1, as he finds it a very
important metric in achieving a higher degree of profitability. A 2:1 profit-loss ratio means that
winners are twice the size of losers.
This might mean a hard stop for half of the profit target (ex: 10-cent profit with a 5-cent stop
loss) . In theory, trading with 1000 shares would mean $100 profits for every $50 loss on a trade.
As explained by the Profit Trifecta, one can have a low accuracy and still achieve profitability by
having a high profit loss ratio. A key ingredient to a good profit-loss ratio is being able to cut
losing trades quickly. Traders who have big losing trades can have a harder time with the
emotions of losing.
Ross finds that the best way to achieve a higher profit-loss ratio is by increasing winners and
decreasing losers. While this is easier said than done, patience and discipline can play a big
role here. Ross focuses on only the best trading opportunities that he can find and does his best
to be patient while waiting for such opportunities.
2. How do you manage risk? Do you use stops? Do you limit the setups that you trade?:
Another simple way that Ross has achieved a higher profit-loss ratio is by limiting himself to
the highest quality setups each day. Each day he gives the day a rating on a scale of 0-10.
Based on the rating, he adjusts his risk tolerance for the day. On colder days, he will not trade
anything less than an A quality setup. In a hot market, he finds lower quality setups can still
produce profits and adjusts his criteria accordingly.
When he's trading pre-market he cannot use stop orders, so he must have his hand on the
"SELL" hotkey at all times. His mantra is "Breakout or Bailout".
3. Are you overtrading?: We strongly believe that overtrading is one of the most dangerous
traps that traders fall victim to. Overtrading typically implies that a trader is not trading with a
proper edge, which turns their trading into gambling, or revenge trading.
Ross generally tries to limit the number of hours he'll sit at the computer in order to avoid
overtrading. Some days, he may not make any trades. Other days, if he feels that the
opportunity is there, he may take more trades than
Copyright © 2024 Warrior Trading™ All rights reserved.
1
usual. However, he has found in his experience that 3-5 trades per day is a good target to aim
for, as it can help to make sure he’s patiently waiting to trade only when seeing the strategy's
statistical edge present itself.
4. What is your accuracy?: Ross has found that the best way for him to achieve a higher
accuracy percentage is by being patient, waiting for the right opportunities, and being disciplined
to only trade the opportunities that he is most confident in. Trading out of boredom or
desperation can be a quick path to low accuracy.
Once again, you may find it helpful to review chapters 7-11 of the Small Cap Day Trading
Course to learn more about what Ross considers to be the best setups for his small cap
strategies.
5. Are you sizing your trades correctly for your risk tolerance?: One of the things we have
observed to be detrimental to beginner traders is trading with too big a position relative to their
risk tolerance. While it is definitely understandable that bigger position sizes make it easier to
make more money, it is also true that bigger position sizes make it easier to lose more money as
well. If you think you fall in this category, you may find it very helpful to focus on mastering your
trading strategies before attempting to achieve specific profitability targets.
To elaborate, instead of focusing on generating $X in profits, Ross finds it’s most important for
traders to first build a foundation of accuracy with a strategy. If a trader can be profitable with
small share size, it can build the confidence and experience necessary to scale one’s position
size higher.
Focus on the process, trust your system, maintain your discipline. Profits are a byproduct of this
level of discipline.
Remember, trying to be profitable with large share size normally results in elevated
emotions.
6. Are you trading mindfully?: Trading is best done without emotion, and by following a
written trading plan. It is nearly impossible to manage emotions when trading with a position
size that puts you at significant financial risk. Emotional or reactive decisions in trading
can lead to increased stress levels and greater losses. Remember, trade the market you're in,
not the market you want to be in.

2
7. Is it time to “reset”?: The concepts of patience, discipline, and emotional management are
core concepts that extend to nearly all aspects of trading. Trader Rehab is a course designed to
help with these points. Trader Rehab aims to help members who are struggling with their trading
and need to reset their psychological framework around trading. In this course Ross shares
what has worked for him in the past when he needs to reset his thinking or get back on track
after a big loss or negative metrics.
8. Final Reminders
As always, please remember not to trade with money you cannot afford to lose and to always
use a trading simulator when trading a new strategy or adjusting an existing strategy. As Ross
often states, trading is not about winning every time and all the time. However, it can be very
difficult to recover from a major loss. For this reason, it’s very important to manage downside risk
at all times.

Analyzing Your Trades

Uploaded by

Copyright:

Available Formats

Analyzing Your Trades

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Analyzing Your Trades

Uploaded by

Copyright:

Available Formats

Analyzing Your Trades

Copyright © 2024 Warrior Trading™ All rights reserved.

Copyright © 2024 Warrior Trading™ All rights reserved.

Copyright © 2024 Warrior Trading™ All rights reserved.

You might also like