I want to quantify the performance of a trader and as I see in the books, there's a performance measurement called win ratio for this.
In a book, it is defined as:
Win ratio explains what portion of the trades, trading days or trading months ended profitably. WinRatio = # Trading Periods|Gain>0 / # Total Trading Periods
Let's think of a day trader. She closes the day as flat. So, in order to define win ratio for her, I must calculate trade-by-trade performance, right? Because she is always flat at the end of days(my period is 1 day). For her, is it reasonable to define win ratio like the following?
WinRatio = # Trades|Gain>0 / # Total Trades
If so, then I want to clarify how should I count the winning and losing trades. Let's say she made the following operations:
- Operation 1 - bought 10 shares at €3
- Operation 2 - bought 10 shares at €4
- Operation 3 - sold 3 of 20 shares at €2
- Operation 4 - sold 5 of 17 shares at €1
- Operation 5 - sold 2 of 12 shares at €4
- Operation 6 - sold 12 shares at €3.6
Should I consider both buy and sell as separate trades? I mean, is it correct that there are 6 trades here? or only the sell operations should be considered as trades?
In my opinion, Operation 1 and Operation 2 are not trades, is it correct? If so, how should I tag these operations as "Winning trade" or "Losing Trade"?