Definition
Average Trade Profit/Loss is the mean net profit or loss per trade over a specific period.
Calculating Average Trade P/L
Divide your total net profit or loss by the total number of trades executed.
Average Trade P/L = Total Net Profit or Loss / Total Number of Trades
Examples
Example 1
- Total net profit: $20,000
- Number of trades: 100
- Calculation: Average Trade P/L = $20,000 / 100 = $200
- Interpretation: You earn an average of $200 per trade.
Example 2
- Total net loss: -$5,000
- Number of trades: 50
- Calculation: Average Trade P/L = −$5,000 / 50 = −$100
- Interpretation: You lose an average of $100 per trade.
| How It Can Be Used | Limitations |
|---|---|
| Assessing efficiency of trading strategy | Can be skewed by large wins or losses |
| Planning future trades and position sizing | Doesn’t show distribution of wins and losses |
| Comparing performance across periods | May not be meaningful with small sample sizes |
In Practice
Average Trade P/L offers a quick snapshot of your trading performance per trade, helping you evaluate the overall effectiveness of your strategy.
