Futures trading has its own lingo. You will run into phrases you don’t know. With any luck, this practical guide will aid you in understanding.
Annual Return – The return per year
Average losings – Gross Losings / Total # Losses
Average Lose Days – The average number of days before a losing trade is closed
Average winnings – Gross Winning / Total # Wins
Average Win Days – The average number of days before a winning trade is closed
Benchmark – A 60% stock / 40% bond portfolio is commonly accepted in the financial industry as the expected return
Buy-Hold – Buying a futures contract and holding on indefinitely. Popularized by billionaire Warren Buffet
Gross Losing – Total losses from losing trades. This is regardless of the winning trades.
Gross Winning – Total gains from winning trades. This is regardless of the losing trades.
Loss – A losing trade
Monte-Carlo Simulation – A random re-ordering of the closed trades to discover the best and worst possible outcome from trading a certain strategy
( MC-BEST, MC-WORST)
Payoff – Average winnings / Average losing
Profit Factor – Gross Winning / Gross Losing
Trade – A buy or sell transaction that is closed.
Trading Strategy – Pre-determined rules of entering and exiting trades
Win – A trade that results in profits
