Everyone is always trying to make better trades, riding winners longer, cutting losers earlier and increasing their overall winrate. But, how do you get there and what is needed to make sustainable and meaningful changes?
Most traders change their approach on a trade-to-trade basis, without ever backing their changes up by hard numbers. Edgewonk can help you take out the guesswork; the internal algorithms crunch your trading data in new ways and find weaknesses in your trading and identify areas where you can make adjustments that lead to significant improvements.
The “Updraw” and the “Drawdown” are two of the most popular metrics among our Edgewonk users because they provide valuable insights into your trading that can help you realize bigger winners, avoid giving back profits and increase your overall winrate. The following article shows you how to use the Updraw and Drawdown to tweak your trading.
Bigger winning trades with the help of your Drawdown
The Drawdown measures the lowest price of your trades and it tells you how much price moves against you during the duration of your trades.
In Edgewonk, you can filter your trading performance by the outcome of your trades. You should filter for winning trades and pay close attention to your Drawdown value. If it is significantly less than 100%, you are setting your stop loss too far away.
Reducing the distance of your stop placement, potentially increases your reward:risk ratio and, thus, the size of your winning trades. Once you understand the connection between Drawdown, winning trades and the reward:risk ratio, it becomes really as simple as that.
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A higher winrate and better performance with the Updraw
The Updraw measures the highest price of your trades and how much price moves in your favor. In your Edgewonk journal, filter for losing trades and analyze the Updraw values.
An Updraw of close to, but less than 100%, indicates that price almost makes it to your take profit order; but then price turns ahead of your profit target.
A trader who finds that the Updraw of his losing trades is just slightly below 100%, can potentially increase his winrate and turn losing trades into winning trades by setting his profit target a bit closer. He then avoids giving back profits and can close his trades for profits.
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3 clicks in Edgewonk to analyze your trading data
Everything in Edgewonk is built and designed to help our users find their edge faster. If you want to analyze your Updraw and Drawdown, go to the Performance Tables, select the outcome filter in the top left and your performance data updates immediately. On the right, you then find the statistics for your Updraw and Drawdown.
You can go one step further and take a closer look at your data by applying the other Edgewonk filters to your performance metrics. You can analyze your performance individually for specific reward:risk ratio sizes, position sizes, based on the quality of your trades, or with the help of any of the personalized Custom Statistics.
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Taking out the guesswork to build confidence in your skills
Most traders “follow their instincts” which typically means that they make random changes to their trading strategy without knowing if it’s really what they should be doing.
Edgewonk’s performance analysis takes out the guesswork and provides actionable tips about how to adjust your trading. By knowing that your changes are backed up and confirmed by sophisticated trade and price analysis, you can more confident in your trading, make better trading decisions and improve your trading step by step with the help of personalized performance feedback.
Interested? Try the Edgewonk trading journal for free and see how it can help your trading. If you don’t want to go this path alone, take a look at our 12-week journaling and trader development program.