Emini Trading Blog

Part Two – Key Daily Trade Metrics

Each pilot knew the weather conditions were the same from deck to ceiling. Yet, their choice in routes differed. Due to an acute knowledge of the planes conditional fuel consumption characteristics, the first chose to muscle through the bumpy air atop safe flat terrain. The second, having been expertly trained in avionics, sought to fly over unfamiliar peaks. Although their routes varied, each arrived safely and in good time. As we trade the e-mini S&P, each of us face the same conditions, yet the routes by which we seek to capture profits vary greatly, don’t they? Regarding the route we’ve chosen or more specifically, trades we’ve placed in the last week, month, and year, are there unknown strengths and weaknesses that have until now prevented our “arrival” as expert traders? 

Emini Trading Chart - February 17, 2010

In consideration of Key Daily Trade-Metrics, we will use three metrics to uncover personalized strong and weak points and the impact these can have on our success. By tabulating them daily and tracking them over time we can clearly see where our success occurs, our current level of awareness toward opportune conditions, and our propensity to adapt to shifts in market behavior. These three metrics reveal the impact our habits have on our trading and show us viable solutions!

KNOW WHERE YOUR PROFIT OCCURS
The metric inputs are: Compare profitable trades and their quantity to their direction. Most likely, the answer is not 50/50. Thus, knowing profits occur, i.e. predominantly when entering long, we could correct our course by doing two things. First, when trading in a confirmed uptrend, increasing quantity could produce greater gains. Secondly, we could pursue improving our ability to recognize and profit from market weakness.

HOW TO SPOT YOUR OPPORTUNE TRADE CONDITIONS
Each day, compare the total number of entries and each entries quantity to the number of valid trade opportunities per your strategy. Does your frequency and size match the ever changing frequency of opportunities present? If you find that your trade frequency is static, likely you are both missing quality entries when these are more present and forcing trades despite diminished opportunity.

RECOGNIZE CHANGES IN MARKET BEHAVIOR
How well we perform in this area can be gauged by tracking the length of time over which we maintain profitability or the lack thereof. For example, investigating a stretch of unprofitable trading will undoubtedly reveal numerous missed cues on our part. Clearly, identifying these missed cues is the first step in preventing a repeat.

 Use these key trade metrics daily and tracking their results over time wil help you improve your trading and to become a professional emini trader.