Hello, When calculating win to loss ratio, risk vs reward, expectancy, etc, do you consider breakeve trades (money loss due to breakeven commission) as a loss? Thanks
Thank you Handle123, I didn't know that. So if commission per trade is -$12, that counts as a loss even though its a breakeven trade?
They definitely must be counted, but I have found it illustrative to go both ways -- count flats ($0 profit, with round-trip commissions waiting like a vulture to be counted) as both losses, and then separately, as winners. If I'm evaluating a technique, I count 'em as winners -- that makes the technique I'm evaluating look rosy, and I just feel *so* smart then..... But when it comes to trying to project revenues going out in time.... then I figure 'em as losses, to be more conservative on what I just decided was my New Big Thing technique.... Make sense?
If I lose one penny, that is subtracted from my account, so it is a loss to me. It is why I stress always take a tick in ES so it pay the fees and lunch no matter what size one trades.
If your BE trade loses money after commish/fees/taxes, it is a loss. If it makes money after commish/fees/taxes, it is a win. That's how I look at it. Seems easy enough.
Thank you all. I went back and include all breakeven trades as loss in the loss column. Now my win to loss ratio is more accurate cause commission is a loss.
Commission should only be counted as a loss if your trade closed at a point where it's gain did not exceed your commish/fee/tax expense. Even if after all is said and done, you net $.20, $.10, even a penny, that is a gain. That is profit. Think about it.
I track Wins, Losses and Scratches. The scratch trades give me feedback on target and initial stop and break even stop evaluation with respect to MFE and MAE. Commission is a variable cost of doing business and it reflects in my P&L, where it belongs.