Skip to content

Performance Review

Difficulty intermediate

Overview

Regular performance review is essential for identifying strengths, weaknesses, and areas for improvement in your trading.

Key Performance Metrics

Return Metrics

Metric Formula Interpretation
Total Return (End - Start) / Start Overall profit/loss
CAGR (End/Start)^(1/n) - 1 Annualized growth rate
Monthly Return Average monthly return Consistency measure
Best/Worst Month Max/Min monthly return Range of outcomes

Risk-Adjusted Metrics

Metric Formula Good Range
Sharpe Ratio (R_p - R_f) / σ_p > 1.0
Sortino Ratio (R_p - R_f) / σ_down > 1.5
Calmar Ratio CAGR / Max DD
Information Ratio (R_p - R_b) / TE > 0.5

Trade-Level Metrics

Metric Formula Interpretation
Win Rate Wins / Total Trades > 50% preferred
Profit Factor Gross Profit / Gross Loss > 1.5
Avg R-Multiple Avg P&L / Avg Risk > 1.0
Expectancy WR × AvgWin - LR × AvgLoss Positive = edge

Self-Assessment Questions

Monthly Review

  1. Did I follow my trading plan?
  2. What was my best trade and why?
  3. What was my worst trade and why?
  4. Did I manage risk properly?
  5. What patterns do I see in my trades?
  6. Am I improving month over month?
  7. What will I focus on next month?

Quarterly Review

  1. Is my strategy still valid?
  2. Have market conditions changed?
  3. Do I need to adjust my approach?
  4. Am I meeting my performance targets?
  5. What is my edge, and is it degrading?
  6. Should I add or remove strategies?
  7. What are my goals for the next quarter?

Annual Review

  1. Total annual return vs. benchmark
  2. Risk-adjusted performance assessment
  3. Strategy-by-strategy performance
  4. Psychological growth assessment
  5. Capital allocation review
  6. Goal achievement review
  7. Next year's plan and targets

Continuous Improvement

Review → Identify → Plan → Execute → Review

1. Review performance data
2. Identify areas for improvement
3. Create specific action plan
4. Execute changes
5. Review results

Practical Guidelines

  1. Be Honest — Don't sugarcoat poor performance
  2. Focus on Process — Not just outcomes
  3. Use Data — Let numbers guide improvements
  4. Set Specific Goals — Vague goals don't work
  5. Compare to Peers — Know where you stand
  6. Stay Humble — Good periods don't mean you've mastered trading
  7. Never Stop Learning — Markets evolve, you must too

Next Steps