Track record


The track record is the results curve of an investor, a collective investment institution or a trading system during a specified period of time.

The track record is formed by the set of operations carried out by a trader in a period of time. To put it in some way, the track record is to the trader, as the academic record is to the student of a university. It is the results history.

For example, if a student has completed three university degrees and a total of 120 subjects, his track record will be the academic record that reflects all his grades.

Another example could be the accounting entries of a company. The company reflects its profits or losses, as well as its balance sheet, in the annual accounts. But your track record would be the record of all the accounting entries that lead you to obtain that result. These accounting entries are recorded in the journal.

Difference between track record and main statistics

In the first instance, it is important to differentiate well between track record and main statistics. The main statistics have to do with profitability and risk.

The normal thing is that investment funds or traders offer information on what they have gained (profitability), what they have lost (maximum drawdown) and the variation of these gains and losses (volatility). The first is a measure of earnings, while the last two are measures of risk. The track record, however, goes much further. It is a detailed record of each and every operation.

Below is an example of what is a track record and what is not a track record.

It is not a track record

Although they are detailed statistics, the data in the image above is not considered a track record. They are detailed statistics of the results of a trading system, but only that.

It's a track record

The top image is a real track record. It is the track record of the first 36 operations of the same trading system from the first image. This track record has a total of 1276 operations over 9 months. As we can see, we have each operation recorded in detail. The time, the type of operation (long or short), number of contracts that are bought or sold, the entry price, exit price, etc.

Rating of a track record

To assess the history of operations of a trader it is advisable to know what variables we have to study. In our case, it is not easy to study 1276 operations. That is why we must draw general conclusions through its study. There are many ways to assess a track record. The simplest appear in the report that we have seen initially. That is, detailed statistics of the results history.

In this detailed study, in addition to the graph, we have many statistics. Among the most important are:

  • Profitability: It is obtained by dividing the total net profit by the initial deposit, multiplied by 100 to express it as a percentage. In this case the initial deposit is $ 20,000. So the profitability is 379% ((75,880.46 / 20,000) * 100)
  • Profit factor or profit factor: How many euros or dollars we earn for each euro or dollar we lose. In this case, for every $ 2.23 we earn, we lose $ 1.
  • Maximum drawdown: Maximum reduction with respect to our capital during the period studied. The maximum drawdown of this trading system is 3.79%. That is, the maximum loss we have had has been 3.79% during the period studied.
  • Percentage of success: It is a relevant statistic but not a determining one. In other words, what is really important is how much the system gains when it succeeds and how much it loses when it fails. In this case, the trading system hits 18% of the time and fails 82%. Of course, when he succeeds, he wins much more than when he loses. Therefore the profitability is positive. It is important, above all, to know that you will miss more than you will be right.

Other important measures to assess the track record are VaR, volatility or a Monte Carlo simulation. Finally, it should be noted that it is vitally important to study a track record in detail before hiring the services of a professional. The track record must be audited by a company legally qualified to do so. If the track record is not audited, it has no value. Without this prior study, it is not advisable to invest.

Tags:  Commerce bag markets 

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