You may be a casual binary options trader, who is just trying to have some fun and maybe make some profit along the way. But maybe you are a very serious trader, and you want to come up with a trading method which is going to net you some real gains over the long term. If so, then you may have already read our article on backtesting. In that article, we discuss the importance of testing your trading method using historical charting data, and then plotting the results in a spreadsheet. Then you can examine those results, run calculations, and establish whether your trading method will result in profit over time or loss, as you project it forward onto future trading. Trading statistics are important though? One misunderstanding that newbie traders sometimes have is this idea that there is one all-important statistic that is going to determine success or failure. Obviously you want to aim to win more trades than you lose. But what if your wins are all really small, and your losses are all really big? This could add up to equal failure. The same thing can go the other way around. Maybe you only win about half your trades, but your wins on average are substantially larger than your losses, because you would close early out of trades going against you. So you can see that things are a little binary complex than they appear on the surface. How many winning trades you have versus losing trades, expressed as a percentage. This is one of your most important numbers, but remember that it trading not stand alone. Average win size versus average loss size: Calculate both at the end of your test and compare them. If your average win is larger than your average loss, that is great, but again, this statistic does not stand on its own. Net income based on your test: If you added up all your wins and losses, and took the net result, would it be positive or negative? How positive or negative? Make sure that statistics calculate the result based on the payout percentages and out-of-money rewards offered by the broker you will be trading with. If those numbers vary, stay on the safe side and be conservative. Use the statistics win percentages instead of the larger or average ones when you do your math, and use the lower out-of-money rewards. That way, you could feasibly find yourself with more money than you expect, but not less. This can be helpful analyzing the rate options which you would be receiving potential income, and whether it is timely enough for you. If it binary not, you could for example consider adding more financial instruments to your trading repertoire. This might give you access to more trade set-ups. Another idea would be to try faster trades, but use caution with this approach. Maximum losses in a row: Figure out what your worst losing streak was. That way when you are trading in real life, you will be more likely to recognize a genuine anomaly and be able to distinguish it from an expected losing streak. This is a risk management statistic popularized by a free trading eBook by Rob Booker for currency traders. This number tells you how many of your largest losses you could endure in a row before you would blow your account. The larger the number, the better. When you put these statistics together, you paint a much more illustrative picture of your success or failure than you would with any one statistic. You are able to see how your system would perform overall and options specific strengths and weaknesses. You can then hone in on those weaknesses in future tests and attempt to boost your weaker statistics without damaging your stronger ones. Click here to learn how to chart your own success and failures trading binary binary trading. Your email address will not be published. Uranium One Viterra Bombardier 2. Home Recommended Brokers 24Option Review Banc De Binary Review Traderush Review Porter Finance Canadian Binary Options Brokers 60 Second Brokers Broker Checklist Options Brokers Have The House Edge Avoid Scams Understanding Bonuses Is Your Broker Ripping You Off? Mobile Apps Mobile Trading Guide Trading Tips Beginner Tips Binary Trading is Simple Not Easy 6 Stats That You Should Know Accountability Trading Partner. There Is No One Magic Statistic One misunderstanding that newbie traders sometimes have is statistics idea that there is one all-important statistic that is going to determine success or failure. So what statistics should you try to tally up while you are testing? Here are our suggestions: This entry was posted in Trading Tips. Leave a Reply Cancel reply Your email address will not be published.
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