Analytics for FX trading give us the ability to measure performance and risk, improving management, performance, and execution. Indeed, it is only through using the proper metrics that we can hope for a better outcome, and that’s where ONESTAT comes in.
Which Are the Best Metrics for FX Trading Performance and Risk?
Last week, we discussed how tennis legend Roger Federer had won an incredible 80% of his matches even though he had only accumulated 54% of the points he had played for. This, as we saw in our article about the investment lessons we can learn from Federer’s stats, showed that the secret to success is to fight and win the important battles, something that has to be based on data.
But, we can hear you ask, which data is crucial when it comes to FX trading?
Let’s start from the basics: at a high level, it’s important to identify metrics that can tell us what is performing and the associated levels of risk.
Most people tend to look at a few numbers to qualify performance, such as return, drawdown, and leverage. Moreover, different analytics software may apply different metrics, leaving you with gaps in your knowledge. None of this can really be sufficient to understanding your trading unless you are able to answer the following:
- Is the return coming from just one lucky investment, or is it distributed across all investment instruments?
- How is the risk distributed over time, and how does a risk parameter influence the return?
- What can be done better and more efficiently?
- What is the impact on costs?
These are simple questions whose answers require several numbers, as well as in-depth knowledge.
How Can I Easily Implement the Metrics That I Need?
Typically, a systematic manager goes in-depth with such analysis, while a discretionary investor tends to consider just a few numbers. Neither is incorrect, given you get the answers to the questions you’ve posed. Either way, however, once you’ve got your answers and know what you need for your analytics for FX trading, the next step is to build your metrics model.
There is a wealth of literature about metrics, but it’s important to identify the ones you need according to your investment style and which are most relevant to you.
When you have clarity on the metrics, you then have two options:
- Check if your data analytics tool has all the metrics that you need.
- Implement your metrics into a customisable analytics tool.
Even so, experience shows that it is really hard to find off-the-shelf analytics software that includes all the metrics you need.
Why Not Try ONESTAT For Your Analytics for FX Trading?
When we set out to create ONESTAT we wanted it to have a large set of standard metrics to analyse your FX trading in depth, with the flexibility to integrate any additional calculations you may need. Moreover, its dashboard, which operates via the integrated TIBCO Spotfire®, can also be customised to show the relevant information you need.
So, what are you waiting for? Get in touch with us to discover how you can improve your analytics for FX trading with ONESTAT.