Calculating Your Day Trading Performance
The goal of day trading is to make money, but when the trades are coming fast and furious, figuring out how you’re doing can be hard. Here are a couple simple ideas that let you gauge your performance as a day trader:
Batting average: What’s the number of winning trades relative to the total number of trades you make? This number gives you a rough idea of how often you’re making money, although it doesn’t tell you how much money you’re making. If at least half of your trades are winners, you’re on the right track.
Modified Dietz method: This is a quick way to gauge your performance when you have been adding money to your account or taking it out. What it loses in accuracy, it makes up for in simplicity. Here’s the equation for the Modified Dietz method:
EOY represents the end of year asset value and BOY represents the beginning of year value.