What to measure on demo

Four numbers that tell you if your strategy works

If you can't measure it, you can't improve it. Demo is where you build the measurement habit, because once live emotion shows up, you'll be tempted to skip the boring tracking and just chase the next trade. Here are the four numbers that, taken together, tell you whether you actually have an edge.

Number one: winrate. The percentage of your trades that ended profitable. Sounds simple. The trap is treating winrate as the whole picture. A 70% winrate sounds great until you realize the average win is $5 and the average loss is $50. Winrate alone is meaningless. It only matters when paired with the next metric.

Number two: R-multiple. R is the size of your risk on a trade. If you risked $10 to make $30, that was a +3R trade. If you risked $10 and lost the whole thing, that was a -1R trade. R-multiple turns wildly different dollar amounts into apples-to-apples comparisons. The metric you care about is the average R across all your trades — your expectancy. A 50% winrate at +2R average wins versus -1R average losses gives you 0.5R of expected profit per trade. That's an edge.

Number three: max drawdown. Track your equity peak-to-trough. If your demo balance climbed to $11,200 and then drew down to $10,400 before recovering, that's an 800-dollar drawdown — about 7% from the peak. Why this matters: live trading will have losing streaks bigger than you expect. If your demo max drawdown is 8% and your live tolerance is 5%, you'll choke and quit before your edge has a chance to recover. Measure drawdown honestly on demo so you're not surprised.

Number four: time in trade. How long, in minutes or hours, do you typically hold? This sounds soft but it's diagnostic. Traders who hold losers 4 hours and winners 4 minutes are cutting profits short and letting losses run — a classic anti-edge. Reverse that ratio and you've fixed a huge chunk of new-trader leakage. Time in trade is also the reality check on your strategy's claimed timeframe — if you 'swing trade' but the average hold is 12 minutes, you're not actually doing what you think you're doing.

Recap: winrate, R-multiple, max drawdown, time in trade. Four numbers. Track them on every demo trade. The combination tells you what no single metric can.