Trading Performance Metrics: The Numbers That Actually Matter

You made 50 trades last month.

You're up $2,000.

You think: "I'm doing great."

But are you really?

Let's check the numbers:

• Win rate: 35% (you lose most trades)
• Average win: $500
• Average loss: $400
• Profit factor: 1.09 (barely profitable)
• Max drawdown: -15% (huge risk)
• Average R:R: 1.2:1 (poor)

The truth? You're gambling.

One bad month could wipe out everything.

Meanwhile, the pro trader next door:

She made 30 trades. Up $3,000.

Her numbers:

• Win rate: 48%
• Average win: $600
• Average loss: $250
• Profit factor: 2.3
• Max drawdown: -6%
• Average R:R: 2.8:1

She's trading. She'll be profitable for years.

Here's the difference:

She tracks her metrics. She knows what's working.

You don't track. You're flying blind.

Let me show you which metrics matter and how to use them in 2026.

Why Most Traders Track the Wrong Metrics

Mistake #1: Obsessing Over Win Rate

You think: "I need 60%+ win rate to be profitable."

Reality: Win rate matters less than you think.

Example:

Trader A: 60% win rate, 1:1 R:R

• 10 trades: 6 wins ($600), 4 losses ($400)
• Net: +$200

Trader B: 40% win rate, 3:1 R:R

• 10 trades: 4 wins ($1,200), 6 losses ($600)
• Net: +$600

Trader B wins more with lower win rate.

Why? Risk-reward matters more.

Mistake #2: Only Tracking P&L

You look at: "Am I up or down?"

You don't look at WHY you're up or down.

Are you winning because of skill or luck?

You don't know.

Mistake #3: Ignoring Risk Metrics

You track wins. You ignore drawdown.

Big mistake.

High win rate + big drawdown = time bomb.

Mistake #4: Tracking Everything

You track 50 metrics. Information overload.

You can't see what matters.

Fix: Track 10-12 key metrics. Ignore the rest.**

The 12 Metrics That Actually Matter

Metric #1: Win Rate

What it is: Percentage of winning trades

Formula:

Win Rate = (Number of Wins / Total Trades) × 100

What's good:

Why lower for longer-term? You're aiming for bigger R:R.

Example:

50 trades. 22 wins.

Win Rate: 22/50 × 100 = 44%

Interpretation: Decent for swing trading.

Metric #2: Average Win vs. Average Loss

What it is: How much you win vs. lose on average

Formula:

Average Win = Total Wins / Number of Wins
Average Loss = Total Losses / Number of Losses

The key: Your average win should be larger than your average loss.

Example:

Trader A:

• Average Win: $300
• Average Loss: $250
• Ratio: 1.2:1 (weak)

Trader B:

• Average Win: $600
• Average Loss: $250
• Ratio: 2.4:1 (strong)

Trader B wins more even with lower win rate.

Metric #3: Risk-Reward Ratio (R:R)

What it is: How much you risk vs. target per trade

Formula:

R:R = Target Amount / Risk Amount

What's good:

Example:

Trade:

• Entry: $175
• Stop: $170 (risk: $5)
• Target: $185 (reward: $10)
• R:R: 10/5 = 2:1 ✓

Track your average R:R across all trades.

Metric #4: Profit Factor

What it is: Gross wins vs. gross losses

Formula:

Profit Factor = Total Wins / Total Losses

What's good:

Example:

Last month:

• Total Wins: $10,000
• Total Losses: $4,500
• Profit Factor: 10,000 / 4,500 = 2.22 ✓

Interpretation: Excellent. You're making $2.22 for every $1 lost.

Why it's better than win rate: Accounts for size of wins/losses.

Metric #5: Expectancy

What it is: Average profit or loss per trade

Formula:

Expectancy = (Win Rate × Average Win) - (Loss Rate × Average Loss)

What's good:

• Positive expectancy: You make money long-term
• Negative expectancy: You lose money long-term

Example:

Your stats:

• Win Rate: 45%
• Average Win: $500
• Average Loss: $300

Expectancy: (0.45 × $500) - (0.55 × $300) = $225 - $165 = $60 per trade

Interpretation: You make $60 per trade on average. Excellent.

At 50 trades per month = $3,000 per month.

Another example:

Your stats:

• Win Rate: 55%
• Average Win: $200
• Average Loss: $250

Expectancy: (0.55 × $200) - (0.45 × $250) = $110 - $112.50 = -$2.50 per trade

Interpretation: You lose $2.50 per trade. High win rate but losing money.

Metric #6: Maximum Drawdown (MDD)

What it is: Largest peak-to-trough decline

Formula:

MDD = (Peak Value - Trough Value) / Peak Value × 100

What's acceptable:

Example:

Your account:

• January 1: $10,000 (peak)
• January 15: $8,500 (trough)
• MDD: ($10,000 - $8,500) / $10,000 × 100 = -15%

Interpretation: Too risky. Aim for under 10%.

Why it matters: Large drawdowns are hard to recover from.

Recovery math:

• -10% drawdown requires +11.1% gain to recover
• -20% drawdown requires +25% gain to recover
• -50% drawdown requires +100% gain to recover

Metric #7: Average Monthly Return

What it is: Average percentage gain/loss per month

Formula:

Average Monthly Return = Sum of Monthly Returns / Number of Months

What's good:

Example:

Last 6 months: +2%, +3%, -1%, +4%, +2%, +3%

Average: (2 + 3 - 1 + 4 + 2 + 3) / 6 = +2.17% per month

Annualized: ~29% per year. ✓

Metric #8: Sharpe Ratio

What it is: Return per unit of risk

Formula:

Sharpe Ratio = (Average Return - Risk-Free Rate) / Standard Deviation of Returns

What's good:

Example:

Your stats:

• Average monthly return: 3%
• Risk-free rate: 0.3% (Treasury bills)
• Standard deviation: 4%

Sharpe: (3 - 0.3) / 4 = 0.675

Interpretation: Taking too much risk for returns. Need to reduce volatility.

Metric #9: Win/Loss Streaks

What they are: Consecutive wins or losses

Track:

• Longest winning streak
• Longest losing streak
• Average winning streak
• Average losing streak

Why they matter: Reveal your psychology.

Example:

Your stats:

• Longest win streak: 8 trades
• Longest loss streak: 5 trades
• Average win streak: 3 trades
• Average loss streak: 2 trades

Interpretation: Decent. But need to watch for tilt during loss streaks.

Metric #10: Trade Duration

What it is: How long you hold trades

Track:

• Average winning trade duration
• Average losing trade duration

The problem: If losers take longer than winners, you're holding losers too long.

Example:

Your stats:

• Average winner: 3 days
• Average loser: 6 days

Problem: You're holding losers 2x longer than winners.

Fix: Cut losers quicker.**

Metric #11: Holding Winners Too Long

What it tracks: Are you exiting winners too early?

Metric: Percentage of max profit captured

Formula:

% of Max Captured = Actual Profit / Max Profit × 100

Example:

Trade:

• Entry: $175
• Max profit: $190 (+$15)
• Actual exit: $180 (+$5)
• % captured: 5/15 × 100 = 33%

Problem: You're capturing only 33% of potential profit.

Fix: Let winners run. Use trailing stops.**

Metric #12: By-Category Performance

What it tracks: Which strategies, setups, or markets work best

Categories:

• By strategy (pullback, breakout, reversal)
• By market condition (trending, ranging)
• By day of week
• By time of day
• By stock/sector

Example:

Your performance by strategy:

• Pullback trades: 52% win rate, 2.5:1 R:R ✓
• Breakout trades: 38% win rate, 1.8:1 R:R
• Reversal trades: 32% win rate, 2.1:1 R:R

Conclusion: Focus on pullbacks. Avoid reversals.

How to Track Your Metrics (Simple System)

Step 1: Create Your Trading Log

Columns needed:

Example:

Step 2: Calculate Monthly Metrics

At month end, calculate:

1. Win Rate = Wins / Total Trades × 100
2. Average Win = Total Wins / Number of Wins
3. Average Loss = Total Losses / Number of Losses
4. Average R:R = Sum of all R:R / Number of Trades
5. Profit Factor = Total Wins / Total Losses
6. Expectancy = (Win Rate × Avg Win) - (Loss Rate × Avg Loss)
7. Max Drawdown = Largest peak-to-trough decline
8. Monthly Return = (Ending Value - Starting Value) / Starting Value × 100

Step 3: Compare to Benchmarks

Compare each month to:

• Your target metrics (what you're aiming for)
• Your previous months (are you improving?)
• Industry benchmarks (how do you compare?)

Example benchmarks:

Performance Analysis Examples (Real Traders)

Example #1: The High Win Rate Trap

Trader A's stats:

• Win Rate: 62%
• Average Win: $250
• Average Loss: $400
• R:R: 1.1:1
• Profit Factor: 0.95
• Expectancy: -$10 per trade

Problem: High win rate but losing money.

Why: Average loss much larger than average win. Poor R:R.

Fix: Improve R:R to 2:1. Cut losses quicker.**

Example #2: The Low Win Rate Winner

Trader B's stats:

• Win Rate: 38%
• Average Win: $700
• Average Loss: $250
• R:R: 3:1
• Profit Factor: 2.4
• Expectancy: $115 per trade

Result: Making money despite low win rate.

Why: Large winners, small losers. Excellent R:R.

Lesson: Win rate less important than R:R and profit factor.**

Example #3: The Inconsistent Performer

Trader C's monthly returns:

• January: +8%
• February: -6%
• March: +10%
• April: -7%
• May: +9%
• June: -5%

Average: +1.5% per month

Problem: Large swings. Good months followed by bad months.

Max Drawdown: -12% (Feb to April)

Issue: Taking too much risk. Not consistent.

Fix: Reduce position size. Improve risk management.**

Using Metrics to Improve (Action Plan)

Step 1: Identify Your Weakest Metric

Review your last 3 months. Which metric is worst?

Examples:

• Profit factor below 1.5 → Need larger wins or smaller losses
• Max DD over 15% → Reduce position size
• Average R:R below 2:1 → Better entries, wider targets
• Holding losers too long → Cut losses quicker

Step 2: Focus on One Metric at a Time

Don't fix everything at once.

This month: Improve average R:R to 2:1

• Only trade setups with 2:1 or better
• Pass on 1:1 setups

Next month: Reduce max DD to under 10%

• Reduce position size by 25%
• Risk 0.75% per trade instead of 1%

Step 3: Track Progress Weekly

Every week, check:

• Am I improving the target metric?
• What's working? What's not?
• Adjust as needed

The 10 Performance Metrics Rules

Rule #1: Track Every Trade

No exceptions. No "I'll remember."

Rule #2: Focus on 5-7 Key Metrics

Win rate, R:R, profit factor, expectancy, max DD. Master these first.

Rule #3: Aim for 2:1 Average R:R

Below 2:1? Improve entries or targets.

Rule #4: Keep Max DD Under 10%

Consistently over? Reduce position size.

Rule #5: Profit Factor Over 1.5

Below 1.0? You're losing money.

Rule #6: Positive Expectancy

Negative? Fix win rate or avg win/loss.

Rule #7: Review Monthly

Calculate metrics at month end. Compare to targets.

Rule #8: Analyze by Category

Which strategies work? Do more of that.

Rule #9: Watch Trade Duration

Losers shouldn't take longer than winners.

Rule #10: Compare, Don't Compete

Compare to YOUR targets. Not to others.

Performance Metrics Cheat Sheet

Your Performance Metrics Action Plan

This Week:

1. Create trading log (Excel or notebook)
2. Log all past trades (last 3 months if possible)
3. Calculate current metrics
4. Identify weakest metric

This Month:

1. Log every trade
2. Focus on improving ONE metric
3. Weekly check-ins
4. Measure progress

This Quarter:

1. Track all 12 metrics
2. Compare month-to-month
3. Identify best strategies
4. Eliminate what doesn't work

Key Takeaways

• Track everything - you can't improve what you don't measure
• Win rate isn't everything - R:R and profit factor matter more
• Average R:R target: 2:1+ - below this, improve entries
• Profit factor over 1.5 - below 1.0, you're losing money
• Expectancy shows real edge - positive = profitable long-term
• Max DD under 10% - consistently over? Reduce size
• Monthly return: 2-4% target - ~25-50% annualized
• Sharpe ratio >1.0 - return relative to risk
• Win/loss streaks reveal psychology - watch for tilt
• Trade duration matters - losers shouldn't exceed winners
• By-category analysis - find what works, do more of that
• Review monthly - calculate, compare, improve
• Focus on one metric at a time - don't fix everything at once
• Compare to yourself - your targets, not others'

Performance metrics separate professional traders from gamblers.

Amateurs trade by feel. They don't track. They hope.

Professionals track everything. They know their numbers. They improve.

Master your metrics. Know your edge. Build lasting wealth.

ChartMini automatically tracks all 12 key performance metrics in real-time, calculates expectancy and profit factors, analyzes your performance by strategy and market condition, and sends you weekly reports so you always know exactly what's working and what needs improvement.