ASSESSING TRADING PERFOPRMANCE

[zyreon]

if you want to set targets I will point out a method i thought of one day:

3 levels

level 1 - The basic minimum: This is the minimum performance standard.
e.g. make 2 times the risk free rate, or 1.5 times what you'd get in a term deposit.

level 2 - The goal: this is a target that will stretch your ability a little, but not too much, i.e. it must be achievable.
e.g. 15 to 25%

level 3 - The dream: this is designed to let you be ambitious, this target must be in the realm of possibility, yet seem a little beyond what you are capable of achieving, half the time you wont reach this goal. The purpose of this is to let you dream a little with out committing to an unrealistic target.
e.g. 50%+

The aim is to exceed level 1 as that is minimm performance, and then to achieve level 2.

be wary of setting your goal beyond what you are capable of in trading as you could end up making stupid mistakes and taking drastic measures to try and get it.

[zyreon]

Sorry, *flicks through book* actually I didn't think of it, I adapted it from "Come into my trading room" - A.Elder

[whiteheron]

zyreon

Whatever your system , I agree with you that you should never take stupid and unnecessary risks to reach the rainbows end , as chances are you will never make it and will just end up in a no win situation between a rock and a hard place instead !!!

I have found that taking some controlled risk is okay ( and profitable most times ) so long as you protect the downside by having stop losses in place and not reducing them if the share price falls
Never get so attached to a share that you can not bring yourself to sell it

Unrealistic goal setting and taking unnecessary risks will surely leed you to the poor house

As a matter of interest I have been stopped out of a share in the last half hour --- TOUGH !!!
This proves to me that I have given it enough rope and I am presently looking for a much better replacement

[Halebop]

Phaedrus is bang on. The concepts of business excellence (and really any form of excellence) is built around self awareness and improvement.

Setting an arbitary number as a benchmark is futile without some meaning behind the numbers. Benchmarks are built around peer performance which is why they are used for this purpose. Nobody gets excited watching the Olympic games and seeing 5 athletes in the same race beat their personal best. We get excited watching the one guy in front beating the world record. This is benchmarking 101.

Even keeping records of your own results and bechmarking those is merely an exercise in self indulgence. It tells you nothing of your skills or ability to outperform. If we didn't want to outperform we wouldn't be investing in shares to start with - we'd put the money nice an safe in a bank deposit or a hole in the ground. In order to know if you are outperforming you need to compare yourself with the performance of others.

So while we don't know who did best in a market, we do know how everyone did via indexing and this is always the place to start with any benchmarking excercise: Beat the average. The market is too highly variable to apply absolutes anyway.

Zyreon: If Mr Elder gives this as an axample of goalsetting then he is not the worlds strongest goal setter. I've never written nor read a business plan that had 3 goalposts for the same goal.

While benchmarking can say: The risk free rate of return is x%, the sharemarket rate of return is y% and the best share growth fund rate of return is z% and your return is a%, your goal should be one number based on relative performance. If you have 3 basic Key Performance Indicators better to say something like outperform the the risk free rate of return, the index and the bottom three quartiles of fund managers by 10%+ than set 3 conflicting goals (and of course, as a winner your ultimate goal is actually to top the list too!)

[whiteheron]

Halebop --- Good comments

NOW FOR SOME HELP FROM ANYBODY
I have been trying to track down a chart or tabulation of the index for Australian mining stocks but without success
There seems to be something on the ASX site , but I have been unable to latch onto it
I am good at doing the things I am used to , but am inclined to get lost when searching out something new

If anyone can point me in the right direction or supply me with a link I will be most grateful Thanks

[Halebop]

ASX provides some basic data on indices here:
http://www.asx.com.au/statistics/l3/...ption_MS3.shtm

S&P have limited constituent data of their indeces. Check out there site here:
http://www2.standardandpoors.com/ser...FEB-2005&fs=15

I just had a quick look but the "Materials" constituents listed are limited to the 59 companies that are also in the ASX 300.

Not sure if this is useful.

[duncan macgregor]

I used to marvel at the ignorance of some investors when PHEADRUS was explaining his technical analysis. It went right over their heads, they shot off in a completely different direction, nothing like what had been explained in simple terms. I put explaining what a time line is, and how easy it makes it, and watch in utter astonishment at some of the off track replies. If you have a new way of doing it that makes it easy,dont bother to share it. The answers and comments have nothing at all any connection to the theory. It matters not if you agree or not, but there is not one of you on track its gone clean over your heads. Perhaps it is a good thing that people have fixed ideas, and cant expand their brain to give an honest negative if they think a system is rubbish. It might be that nature sets people up that if they have a good system it cant be explained to the herd that swim the river and fail to see the bridge. For petes sake get on the wave length if you say anything is wrong, or go down as a complete ignoramous macdunk

[whiteheron]

Halebop , found the indices figures and very useful

As a start I have compared my performance against the ASX 300 and the ASX Materials indices ( for the last four months )

Figures (rounded slightly ) are;

ASX , up by 12.1 %

ASX Materials , the index that best fits what I do , up by 13.5 %

Whiteheron , up by 24 %

I am pretty happy with that , but there is quite a bit goes into achieving it

I now have some benchmarks to compare my ongoing performance to

Thanks

[Halebop]

I'd be estatic with it Whiteheron! You've beaten the ASX300 by a quantum of 100% while earning a positive (and high) return to boot. Nice going!

[whiteheron]

I have been thinking about the return that I have been achieving
Although it looks pretty good , things are not always quite what they seem

I have calculated that if you take into account the time I spend on share trading I need to continually beat the market by a margin of around 10 % to 12 % on an annual basis to get a reasonable return for time expended , however as I am retired and share trading is my hobby and addiction this is not too important to me
What I earn will hopefully pay for the education of my five wonderful grandchildren relieving them of the burden of student loans

The reason that I mention the time factor is that it could be important to someone who is treating share trading as an occupation --- there would be no point in expending a whole lot of time ,energy , capital and taking on risk if you could not beat the market average by some margin and make a reasonable return for time expended

The return I achieved during the period quoted was influenced by two especially good trades that are going to be difficult to repeat ( but who knows ! ) and if these are excluded my return works out at around 10% to 12 % above the market average on an annualised basis , returning me very approximately $25 per hour for the time that I put in ( not too shabby for a hobby I suppose )

Taking all factors into account I have decided to set my foward target to beat the ASX 300 by a margin of 12 % per annum

What applies to me will not necessarily apply to others ; we all have our own circumstances