The Value of Assessing Past Performance

The more we know about our past performance , the more we can put odds in our favor going forward.

The more we know about why profit and loss happened in the past, the better we can work to adjust and modify our parameters and decision making process so as to participate at times and under situations that have historically been profitable. Alternatively, the better we can avoid situations and types of trades that have generally caused losses in the past, the less loss we will have going forward.


Past performance is indicative of future results.

You might be thinking, "what good will knowing what has happened in the past be? The markets are ever-changing and every day is a new day. Past performance is not indicative of future results, right?" Well, not really...

Knowing what our performance has looked like historically is extremely valuable. Every trader has some type of system, some method for getting in and out of the market. Most traders adhere to some set of parameters by which they might execute orders if and when a cue is received. These cues can be determined by anything from the accumulation/distribution of bids/offers, some other technical indicator, support/resistance lines being approached/broken, what another market is doing, or even a talking monkey that gives cues to buy and sell at certain times. There could be any number of reasons why someone trades at any given point. The important thing to note is that every trader has such parameters that dictate and greatly influence decisions to buy or sell when and where.

These parameters, and how a trader reacts to them and uses them to form a decision, are what make up the trader's DNA. I hate to be cliche or esoteric here but it's a fitting analogy.

The trader's behavior is more predictable than the market's. We know what we would do if and when something were to happen. We might do different things for different reasons all the time, and maybe our parameters are not entirely defined and controlled, but there's some commonality in everything Trader A does. There's a different commonality in everything Trader B does.

Yes, markets change everyday. They go up and down, at different speeds, at different times, to different degrees, on different volume, and for different reasons. But each market has it's own character, it's own speed, it's own dynamic price action. At some point every trader has seen something occur in a market that is "uncharacteristic" of that market. So markets have character too. We expect markets to act and react in certain ways because historically they have repeatedly acted in such a way.

The trader and the market are two systems interacting with each other. A trader's efficiency in interacting with the market lies in his knowledge of his own system, and of what generally works and what generally doesn't work.


1. If quality and productivity are to improve from current levels, changes must be made in the way things are presently being done.
2. We should like to have good data to serve as a rational basis on which to make these changes.
3. The twin question must then be addressed: what data should be collected, and, once collected, how should they be analyzed?

-W.G.Hunter






© Copyright 2007 David Adler
All rights reserved

Collecting, Analyzing, and Interpreting Trade Data

Before I go into the actual analysis, I'll explain the process by which it is generated. In my first post I explained the potentially arduous process of mulling over trading results and even keeping track in detail of past performance and results.

We've created a tool in the TraderDNA Analyzer software that streamlines this entire process and does virtually everything for the trader with a few simple commands. There are three steps to the process:


1) Import data. The first step is putting data into the program that does the trade analysis. This is done easily by the trader finding the export facility in her trading software and exporting her trade data into an Excel document. With many trading softwares, the trader can query a batch of data consisting of hundreds, or thousands of trades with a single command. If querying historical data is not an option in the software, data can be queried at the completion of each trading day. In both cases, this process typically lasts less than a minute. Click here for instructions on how to export data from a particular trading software. Once the trader has an Excel file, the file can be easily imported into the analysis program with an additional command.

2) Conduct analysis. This process can be as easy or intensive as the trader prefers. The TraderDNA Analyzer has various types of analysis available as presets that can be run with the trader's newly imported data. Or the trader can come up with his own views and analysis, arranging the data elements and measures as he wishes. That customized analysis format can then be saved as a new preset so that it can easily be run again and again with new data.


3) Interpret the analysis. TraderDNA makes this process incredibly easy and visual for the trader. No one likes looking at numbers. It's important for numbers to be represented visually in different formats because it makes interpretation 10 times easier and most importantly, it makes it interesting, and even fun.


That's it. Now we're ready to look at some analysis...



© Copyright 2007 David Adler
All rights reserved