{"id":546780,"date":"2023-04-06T14:10:35","date_gmt":"2023-04-06T12:10:35","guid":{"rendered":"https:\/\/ftmo.com\/?p=546780"},"modified":"2023-11-10T14:24:55","modified_gmt":"2023-11-10T13:24:55","slug":"consistency-is-very-important-for-success-in-trading","status":"publish","type":"post","link":"https:\/\/ftmo.com\/en\/consistency-is-very-important-for-success-in-trading\/","title":{"rendered":"Consistency is very important for success in trading"},"content":{"rendered":"
The path of a trader is not an easy one, it is usually a bumpy ride with more or less successes and failures on the way. Sometimes everything goes smoothly and one successful trade is followed by another, while other times it is just pain and suffering from watching a series of losing trades and the account being blown up.<\/span><\/em><\/p>\n Every strategy has periods when it works almost flawlessly and generates profits, as well as periods when the trader has to deal with a series of losses. In general, however, it can be argued that when profitable trades outweigh losing trades (either in number or volume), the strategy is profitable in the long run.<\/span><\/p>\n The profitability of a strategy is therefore not only determined by the size of the profit it generates, but also by its performance during good and bad times. In other words, consistency of results is an important aspect for any strategy. This can be defined in different ways. One can check the last 100 trades, or assess the results for each quarter and from there determine whether the strategy is profitable or not over the long term.<\/span><\/p>\n Having consistency is very important, as we can see in the examples of the following two strategies.<\/span><\/p>\n Strategy A:<\/b><\/p>\n – A trader executes 1 trade a day using the same position size for 5 consecutive days.<\/span><\/p>\n – Account size: 100 000 USD<\/span><\/p>\n – 5 trades<\/span><\/p>\n – Profit 50 000 USD (50%)<\/span><\/p>\n – Drawdown 50 000 USD (50%)<\/span><\/p>\n <\/a><\/p>\n Strategy B:<\/b><\/p>\n – A trader executes 1 trade a day using the same position size for 100 consecutive days.<\/span><\/p>\n – 100 trades<\/span><\/p>\n – Profit 30 000 USD (30%)<\/span><\/p>\n – Drawdown 10 000 USD (10%)<\/span><\/p>\n Although Strategy A makes much larger profits per trade, Strategy B performs better over a longer period of time with a lower drawdown, making the strategy less risky and more consistent.<\/span><\/p>\n Every trader should realise as soon as possible that the pursuit of quick profits increases the risk of a strategy and is not the path to long-term sustainable trading. In Strategy A, it can be clearly seen that it experienced a drawdown of 50% in just one week, which may sooner or later lead to an account reset.<\/span><\/p>\n FTMO has launched a new metric within the Account MetriX app called the \u201cConsistency Score\u201d, to enable\u00a0 traders to track their consistency. This indicator measures the trading consistency of each trader, with a higher value indicating a higher consistency of trades, which could help our traders to achieve better results, which should be the goal for anyone who wants to stay in the trading business for a longer period of time.<\/span><\/p>\n The formula for calculation of the Consistency Score is simple: (1 \u2013 (absolute value of the most profitable or losing day \/ absolute result of all trading days)) x 100%.<\/span><\/p>\n Example:<\/b><\/p>\n Trader’s results:<\/span><\/p>\n <\/p>\n The biggest daily profit was 800.<\/span><\/p>\n The absolute sum of all trading days is 100 + 500 + 800 = 1400.<\/span><\/p>\n Consistency Score =(1-(800\/1400))x100 = 43%.<\/span><\/p>\n If a trader\u2019s Consistency Score is 0%, it means that all of his profit was made on a single day. Therefore, it is very difficult to evaluate the consistency and profitability of a strategy based on the results based on only one day of trading.<\/span><\/p>\n If the Consistency Score is 60%, it means that the trader\u2019s most successful trading day accounts for 40% of his total profit.<\/span><\/p>\n Example:<\/b><\/p>\n Trader’s results:<\/span><\/p>\n <\/p>\n The biggest daily gain was 400.<\/span><\/p>\n The absolute sum of all trading days is 250 + 350 + 400 = 1000.<\/span><\/p>\n Consistency score =(1-(400\/1000))x100 = 60%.<\/span><\/p>\n According to the long-term analysis of our traders, we have arrived at the following distribution of results. A value above 80% is considered to be very good because this value indicates that the strategy is likely to\u00a0 be successful in the long term. FTMO values traders who can maintain a consistent approach in addition to profits. A great benefit for consistent traders is our Scaling plan as well as the adjustment of the profit sharing<\/a><\/span> ratio to 90% in favour of the trader.<\/span><\/p>\n <\/a><\/p>\nQuick profits provide no guarantee of success<\/span><\/h2>\n
New Consistency Score in Account MetriX<\/span><\/h2>\n
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How the Consistency Score works<\/span><\/h2>\n
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