Ok, maybe this is splitting hairs, but I'm curious how people calculate a position in the win and loss columns if you either: buy several individual positions (one company) and sell them together or you buy a bunch (again one company), and sell it in several batches. For instance, I've been buying 300 shares of one company, and selling 100 shares at a time. I don't really call this scaling out, because it's often over a period of days. I lock in some profit or perhaps I just rest easier with less on the line. Anyway, this last example, I... Buy 300 shares at $3.75 on 02/25 Sell 100 shares at $3.84 on 02/26 Sell 100 shares at $3.88 on 02/27 Sell 100 shares at $4.00 on 02/28 How do you book that in terms of wins and losses? One position or three? I guess the reason I ask is that in my trading currently, I'm having some moderate success. I've broken some habits and severed some of the long term buy and hold mentality. I've got some confidence. And with that a simple goal... put together a simple winning record. So I'm doing that. Certainly not on any scale. But it's the first step. For this recent period of trading, I've 25 wins to 7 losses. But if I book that example of one winning trade instead of three, well... that affects my record doesn't it? Also, I bought 600 shares of a company, 100 shares at a time over a two week period at various prices. I ended up selling the whole position at once for an overall $3 loss well over a month after I first started buying. Is that 6 positions or one? Individually, it's 4 wins to 2 losses. So what do you think? If I compact the various positions that had a group sell or buy, my "record" would be a more modest 15 wins to 6 losses. If it matters I guess you'd call me a swing trader. But right now, I'm swinging for pennies. Comments appreciated. André
Well, if you sold those 300 shares one share at a time would you say you had 300 wins? I think not. I would call closing out your entire position 1 win or loss.
If you sell them all at once, I would consider the entire position one round-trip trade. You accumulated, then exited. Like others said, use the average basis of all the purchases. It gets trickier when you accumulate and disperse over several trades. The general accounting/tax-wise approach is to do the shares first-in, first-out. If you sold 300 shares, it would be considered the first 300 you bought.
Here's how I do it. In an excel spreadsheet I have entry times and exit times (for you would be entry dates since you are a swinger), and entry prices and whatnot.................... Each line in the spreadsheet represents one complete r/t trade. A normal trade without scaling would look like this: KLAC 3/7/03 long 1000 10:05am 33.75 10:18 am 34.10 .35 (bought 1000 KLAC @ 10:05 am on the 7th and exited @ 10:18 am for profit of .35) If scaling, it would look like this................................. KLAC 3/7/03 long 1000 10:05 am 33.75 10:10 am 33.90 .07 10:18 am 34.10 .17 (bought 1000 KLAC @ 10:05 for 33.75. Sold half position @ 10:10 for profit of .15 credited as only .07 in profit column. Then sold 2nd half @ 10:18 for profit of .35, but credited as only .17 in profit column.) I feel this is the most accurate way of reporting (for me at least). This way your spreadsheet will accurately reflect your p/l. selling 500 shares @ .15 is the same as selling 1000 @ .075. This way at the end of the month when you total your net points, you just multiply by share size and you should be very close to your actual p/l (less commissions of course). Also, although this does give you more winners in the profit column, I don't feel that I am fooling myself because I only credit myself with the correct percentage of profit. ie: sell half, then take post half profits. All the same logic applies to losses or scaling in. Just credit the one sell in increments against the buys.
KLAC 3/7/03 long 1000 10:05 am 33.75 10:10 am 33.90 .07 10:18 am 34.10 .17 ET reformatted this line when I posted it. It should have the 10:18 am moved more to the right so that the times are lined up one under the other. sorry about that......................
Yeah, that's pretty much the way I do it, one entry and three exits = one trade. However on Friday (I think), I went long, then bought some more, then sold some, sold some more, then sold the rest (2 entries, 3 exits). I counted it as two trades. But, I'm not completely comfortable with that - I hope to rethink that idea this weekend.
In your case.. it is really a scaling position.. so it would definitely be counted as 1 round trip trade.
For what it is worth, I don't concern myself with a win/loss ratio. The metric I use is Average profit/loss per share per transaction. It doesn't matter if I scale out or not. I trade SPY, and my goal is to average .10 per share per trade after commisions ( For day trading).
I agree. The number of wins vs. losses is irrelevant. It is possible to have a win/loss ratio of 10 and still lose money over the long haul.