Subtle & customizable audible cues to indicate when charts turnover, plus world clocks for any market — by & for professional traders
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Subtle & customizable audible cues to indicate when charts turnover, plus world clocks for any market — by & for professional traders
Open the appGuidance last reviewed 2026-08-19
Open any trading journal and you are handed a wall of numbers. Most of them are easy to calculate and hard to interpret, which is a bad combination: a statistic that costs nothing to produce still costs something to believe.
This page covers the measures that appear almost everywhere, what each one actually says, and — the part usually left out — what each one hides.
| Metric | Formula | What it hides |
|---|---|---|
| Net P&L | Sum of all results | Whether it came from one trade or a hundred |
| Win rate | Wins ÷ total trades | The size of the wins and losses |
| Average win / average loss | Mean of each group | The outliers that produced them |
| Payoff ratio | Average win ÷ average loss | How often each happens |
| Profit factor | Gross profit ÷ gross loss | The path — and single-trade dependence |
| Expectancy | Average result per trade | Variance, and how long you wait |
| R-multiple | Result ÷ initial risk | Nothing much. This is the honest one |
| Maximum drawdown | Largest peak-to-trough fall | How long you sat in it |
| MAE / MFE | Worst and best point while open | Whether you could have acted on either |
| Sample size | Number of trades | Usually itself — it is rarely shown prominently |
What it is. What you made or lost, added up.
It is the number everyone looks at first and the least informative one on the page. Net P&L answers "did this work" and refuses every follow-up question. Two accounts finishing the year at exactly the same figure can have had completely different years — one grinding upward, the other saved in December by a single position.
⭐ The useful habit is to look at net P&L last, after you know how it was produced.
What it is. The percentage of trades that finished green.
Win rate = winning trades ÷ total trades
Why it means less than it looks. Win rate says nothing about size. A 90% win rate is compatible with losing money, if the 10% are large enough. A 35% win rate is compatible with an excellent year, if the winners run.
There is a rough relationship worth knowing: the win rate you need to break even depends entirely on your payoff ratio.
| If your average win is | You break even at a win rate of |
|---|---|
| 0.5× your average loss | 67% |
| 1× your average loss | 50% |
| 2× your average loss | 33% |
| 3× your average loss | 25% |
Neither column is better. They are different trading styles, and both work. What does not work is a high win rate paired with a payoff ratio you have not measured.
What they are. The mean result of the winners and of the losers, kept separate.
The trap is the mean itself. Averages are pulled around by outliers, and trading results are full of them. One unusually large winner can lift an average win enough to make a marginal system look sound.
⭐ Look at the median alongside the mean. When the two diverge sharply, the average is describing a handful of trades rather than your typical one. If your average win is $400 and your median win is $120, the honest description is "small wins, occasionally a large one" — which is a real edge, but a different one from what "average win $400" suggests.
What it is. How much bigger your average winner is than your average loser.
Payoff ratio = average win ÷ average loss
Payoff ratio and win rate are the two halves of the same picture, and neither is interpretable without the other. Together they give you expectancy, which is the number that actually matters.
What it is. Gross profit divided by gross loss — every winning dollar over every losing dollar.
Profit factor = sum of all wins ÷ sum of all losses (taken as a positive number)
Anything above 1.0 is profitable by definition. Common rules of thumb put 1.5 as respectable and 2.0 as strong, though those thresholds are conventions rather than findings, and they shift with trade frequency and style.
Two things it hides.
Single-trade dependence. Remove your best trade and recalculate. If profit factor falls below 1.0, the record describes one good trade rather than a repeatable process. This takes ten seconds and is the single most useful sanity check on this page.
The path. Profit factor is a ratio of totals, so it has no memory of order. The same trades in a different sequence produce the same profit factor and a completely different experience — and a different chance of you still being in the seat at the end. That is what the K-ratio exists to measure.
What it is. What one average trade is worth.
Expectancy = (Win rate × Average win) − (Loss rate × Average loss)
Expectancy folds win rate and payoff ratio into a single figure, which is why it is more useful than either alone. It has its own page — Trading Expectancy Explained — covering the worked example, the R-based version, and how many trades you need before the number means anything.
What it is. R is what you risked on a trade — the distance from entry to your stop, in money. An R-multiple is the result expressed in those units.
⭐ This is the most honest measure on the page, and the reason is that it normalizes position size. A $200 win on a $100 risk and a $2,000 win on a $1,000 risk are the same trade, executed at different size. In dollars they look nothing alike; in R they are both +2R. Working in R lets you compare a trade from your first month with one from last week without your account size distorting the comparison.
It also exposes a specific kind of self-deception. A trader who moves stops has R-multiples that do not match the plan — losses at −1.8R when the plan said −1R. Dollar P&L hides that. R does not.
⚠️ R only exists if you defined the risk before entering. Reconstructing it afterwards from where the trade happened to go is not measuring risk; it is describing the outcome.
What it is. A composite score from Van Tharp that combines edge, consistency and sample size.
SQN = √(number of trades) × (average R-multiple ÷ standard deviation of R-multiples)
It rewards three different things at once: a positive average result, results that cluster rather than scatter, and enough trades to take the first two seriously.
🔴 In Tharp's own definition the trade count is capped at 100, which most descriptions leave out. Without the cap a method could improve its score just by trading more often. ⚠️ Not every platform applies it, and an uncapped figure from a long record can be several times larger for the same trades.
⚠️ It also penalizes positive skew, because one enormous winner inflates the standard deviation underneath. Full detail on System Quality Number (SQN) Explained.
What it is. The largest fall from a peak in account value to the subsequent trough, before a new peak.
It is the most direct measure of what a strategy costs to hold, and it is the number that decides whether a real person keeps trading. A strategy that returns well through a 45% drawdown is, for most people, a strategy they will abandon at −30%.
⭐ Ask for the DURATION as well as the depth. A 20% drawdown recovered in three weeks and a 20% drawdown that took eleven months are not the same event, and only one of them is survivable while you watch it. Depth is what most journals report; length is what most people actually experience.
What they are. How far a trade went against you, and how far it went in your favor, while it was open.
These are the only measures here that say anything about your exits, which is why they are worth more than their obscurity suggests.
What MAE tells you. Plot MAE against outcome. If your winners rarely go more than 0.4R against you before working, a stop at 1R is wider than it needs to be — you are paying for room you do not use. If winners routinely dip to 0.9R first, a tighter stop would have cut your best trades.
What MFE tells you. If trades regularly reach +2R and you close them at +0.8R, the entries are working and the exits are not. That is a much more specific diagnosis than "I need to let winners run", and it points at a rule rather than at willpower.
⚠️ Both need intrabar data to be exact. A journal working from daily bars, or from your fills alone, can only approximate them — which is fine for spotting a pattern and not fine for precise thresholds.
Every number here is an estimate from a sample, and small samples produce confident-looking nonsense.
Twenty trades cannot distinguish a real edge from a run of luck. The variance in trading results is large enough that a losing method can show a positive expectancy over twenty trades quite comfortably, and a good method can show a negative one.
⭐ The practical rule most people converge on is that you need a few hundred trades before per-trade statistics settle — and more than that when results are widely dispersed. Before then, the numbers are worth watching and not worth acting on.
⛔ Be most suspicious of your best-looking statistic, because the smaller the sample, the more likely your best number is the one luck inflated most.
| Term | Meaning |
|---|---|
| Gross profit | The sum of all winning trades, before subtracting losses |
| Gross loss | The sum of all losing trades |
| R | The money risked on a trade — entry to stop |
| R-multiple | A trade's result divided by its R |
| Drawdown | A fall from a previous peak in account value |
| Peak-to-trough | The distance from a high point to the following low |
| MAE / MFE | The worst and best points reached while a position was open |
| Standard deviation | How widely results scatter around their average |
| Median | The middle value — half above, half below |
The metrics on this page describe individual trades and their totals. They tell you whether the trades were good, and say almost nothing about the shape of the account curve they produced.
For that, see What is the K-Ratio? — a measure built specifically to ask whether an equity curve rose steadily or in lucky lumps, which is a question none of the numbers here can answer.
Formulas and conventions vary between platforms — where a threshold is described as a rule of thumb, it is a convention rather than a finding, and it is worth checking how your own tools calculate a figure before comparing it with anyone else's.
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Nothing on this website is trading or investment advice. Chart Ding is a market clock and alarm tool — it does not recommend trades, evaluate strategies, or take account of anyone's circumstances. Nothing here should be construed as a recommendation or relied on as the basis for a trading decision. Consult a licensed professional before placing real money at risk. Trading involves risk of loss.