What can be some metrics or KPIs ( Key performance indicators) to evaluate performance of an individual trader

Trading
1

Hello guys, I am looking for some metrics / KPIs which could be used to evaluate performance of an individual trader. I know nobody defines such metrics for evaluating a traders performance in reality, but still looking for some metrics
@nithin

1 Like
2

Are you a Product Manager @varun_kumar_nyalapel ?

3

No, I am not a product manager ; ). But working on defining these metrics

2 Likes
4

Maybe this will be a start…

This following is written for automated systems, but applies equally well for individuals too.

Hope this helps

2 Likes
5

Just 3 basic indicators can give a very good indication of trader’s performance. The first is of course the annual percentage returns. But more important is the risk-adjusted return or how much risk or volatility the trader took on to generate his returns. Sharpe ratio is a good indicator for that. Finally, we need to look at maximum drawdown percent to see if it is tolerable. If not, then maximum leverage used has to be adjusted downward to our comfort level. Of course, the percentage returns will also come down proportionately then. To objectively evaluate the trader’s performance in all market conditions, these metrics have to be evaluated over at least a 10 year backtest of his strategy.

1 Like
6

Thanks a lot