A profit and loss statement shows what your trades produced. If you know where to look, you can see what works and what does not, without guessing.
What is in a statement?
Brokers show your result in their own way, but you usually see these parts:
- Realised result: profit or loss on positions you have closed. This is booked for real.
- Unrealised result: profit or loss on positions that are still open. This can still change.
- Costs: commission, spread, financing costs and possibly currency costs. Check whether your statement shows results before or after costs.
- Net result: the result after costs.
Always compare like with like: realised result after costs over a fixed period.
Key figures
Take 20 closed trades in a month as an example:
- 8 winning trades with an average profit of € 150: € 1,200
- 12 losing trades with an average loss of € 80: € 960
- Result before costs: € 1,200 − € 960 = € 240
- Costs: € 3 per trade, € 60 in total
- Result after costs: € 180
From this you get:
| Figure | Calculation | Result |
|---|---|---|
| Win rate | 8 ÷ 20 | 40% |
| Average win ÷ average loss | € 150 ÷ € 80 | 1.875 |
| Profit factor (before costs) | € 1,200 ÷ € 960 | 1.25 |
| Average result per trade, after costs | € 180 ÷ 20 | € 9 |
A profit factor above 1 means the wins were bigger than the losses. With 20 trades that is still a small sample. One outlier can change the picture a lot.
Maximum drawdown
This is the largest fall of your account from a peak to a low. Say your account rose to € 10,500 and then fell to € 9,450. The fall is € 1,050, or 10%. The bigger the fall, the more gain you need to get back. See the drawdown calculator.
A win rate means little without context
Compare two traders over 10 trades:
- Trader A wins 6 times € 50 and loses 4 times € 100: € 300 − € 400 = − € 100
- Trader B wins 4 times € 200 and loses 6 times € 100: € 800 − € 600 = + € 200
Trader A wins 60% of the time and loses money. Trader B wins 40% and makes money. So the win rate only counts together with the size of wins and losses. You can read how this fits together in Risk and Reward in Balance.
Look for patterns
Sort your trades and see whether any groups stand out. For example:
- Time of day: do your losses come mostly at certain hours?
- Type of setup: does one approach work better than another?
- Size of your positions: do you take bigger positions after a win than your plan allows?
- Number of trades: does your result fall in busy weeks?
Beware of quick conclusions. A pattern in 10 trades can be chance. Write down what you see and check whether it repeats. A trading journal helps with that.
Set goals you can influence
You cannot decide whether a trade wins. You can decide how much you risk, whether you follow your plan and whether you keep costs low. Choose goals about your process, for example:
- I never risk more than the amount I chose in advance per trade (see the risk per trade calculator).
- I record every trade on the same day.
- I make no more than the number of trades I chose in advance.
Step-by-step plan
- Export your realised trades over a fixed period.
- Calculate win rate, average win, average loss and profit factor, each after costs.
- Work out your maximum drawdown.
- Look for patterns, and test them in the next period.
- Choose one process goal for the next period.
Work it out yourself
Test yourself
Practice questions to check your understanding, not advice.
What is the difference between realised and unrealised result?
- Realised is the result on open positions, unrealised on closed positions
- Realised is booked on closed positions, unrealised can still change on open positions
- Realised is the result before costs, unrealised after costs
Show answer
Answer:B. Realised is booked on closed positions, unrealised can still change on open positions
Realised result is actually booked on closed positions. Unrealised result sits in positions that are still open and can still change.
In one month you have € 900 profit on winning trades and € 600 loss on losing trades. What is the profit factor (before costs)?
- 0.67
- 1.25
- 1.5
Show answer
Answer:C. 1.5
The profit factor is total profit ÷ total loss = € 900 ÷ € 600 = 1.5. Above 1 means profits were larger than losses, before costs.
Your account rose to € 12,000 and then fell to € 10,800. What is the maximum drawdown?
- € 1,200, or 10%
- € 1,200, or 12%
- € 10,800, or 90%
Show answer
Answer:A. € 1,200, or 10%
The fall is € 12,000 − € 10,800 = € 1,200. Divided by the peak of € 12,000 that is 10%.
Trader A wins 60% of trades and loses money. Trader B wins 40% and makes money. What do you learn from this?
- A lower win rate always means a worse result
- The win rate only means something together with the size of wins and losses
- The win rate does not matter
Show answer
Answer:B. The win rate only means something together with the size of wins and losses
Trader A won 6 times € 50 and lost 4 times € 100 (− € 100). Trader B won 4 times € 200 and lost 6 times € 100 (+ € 200). So look at both together.
Over 20 trades your result before costs is € 300. You pay € 3 costs per trade. What is your result after costs?
- € 297
- € 270
- € 240
Show answer
Answer:C. € 240
Costs: 20 × € 3 = € 60. Result after costs: € 300 − € 60 = € 240. The tutorial always compares the result after costs.
Frequently asked questions
- What is a good win rate?
- There is no general answer. It depends on the size of your wins and losses. A strategy with 40% winning trades can make money if the wins are bigger than the losses. A strategy with 60% can lose money if the losses are bigger. Always look at both together.
- How do I calculate the profit factor?
- Divide your total profit on winning trades by your total loss on losing trades. If the result is above 1, your result before costs was positive. With € 1,200 profit and € 960 loss, the profit factor is 1.25. Subtract costs for an honest picture. With few trades the number says little.
- What is maximum drawdown?
- It is the largest fall of your account from a peak to a later low. If your account went from € 10,500 to € 9,450, that is € 1,050 or 10%. It shows how painful a bad period can be. What fall you can live with is personal.
- What matters more: win rate or the ratio between wins and losses?
- They go together. With a lower win rate you need bigger wins than losses, and the other way round. Work out both with your own figures, for example with the risk/reward calculator.
- How often should I look at my statement?
- Look at your trades weekly and at the bigger picture monthly. Checking your balance every day can push you into impulsive decisions. Pick a fixed moment and stick to it.