A proprietary measure developed by trader2B® indicates a trader’s ability to manage risk effectively and maintain consistent performance in trading. The measure formula takes into account several factors to determine the score, including:
- Maximum Daily Drawdown: This refers to the largest decline in the trader’s account balance from a peak to a subsequent low point during a single trading day. A smaller drawdown indicates better risk management.
- Daily Net Profit: It represents the trader’s profit or loss on a daily basis. Consistent positive profits contribute to a higher consistency score.
- Total Balance: This is the overall account balance of the trader during the specified trading period. A larger total balance suggests better overall performance.
- Trading Period: The duration of time over which the trader’s performance is evaluated. A longer period allows for a more comprehensive assessment of consistency.
By analyzing these factors, the consistency score reflects how well a trader manages their trading positions, the frequency of profitable and unprofitable days, and the relationship between daily drawdown and net profit. A consistency score below 0 indicates inconsistency, while a score exceeding 50 suggests a high level of consistency in trading performance.
