What is a Money Manager?
17 August, 2021
Order Types
17 August, 2021

How to analyze a Trading Account?

Evaluating a Trading Account has great personal and commercial utility. It allows you to know the current status of your trades and perform a statistical analysis of the status of your account. On the other hand, it is also a great way to know if an account is profitable or not, something very useful if someone offers you some type of service that is supported in the performance of their trading account.

Systems to analyze Trading Accounts

There are multiple tools on the internet, but in this case we are going to mention 3 of the best known and most used.

MyFXBook

FXStat

FXBlue

These sites allow you to link one or more trading accounts to their analysis systems. The information that these pages show about your account varies slightly, but in principle they share many elements in common such as the Drawdown, winning trades, losers, most traded pairs and many other data.

What should you analyze?

When evaluating a trading account, there are 4 key elements that you should check:

  • Balance
  • Flotante
  • Equidad
  • Drawdown

Balance

It refers to the current capital that an account has. The balance only takes into account the base capital, closed operations and new withdrawals and / or deposits.

Suppose you have an account of US$ 1,000 and you have an open trade that is generating a loss of US$ 500.

The negative effect of the losing trade will not be reflected in your balance until you decide to close the trade.

Floating

It represents the money that you are making or losing in the operations that you currently have open.

The floating can be positive or negative, depending on whether the sum of all the open operations in your account gives a balance in your favor or against you.

It is an important element since it allows to know the current real status of an account at a given moment.

Equity

It is the sum of the Balance and the Floating.

Following our example, if we have an account with US $ 1,000 of Balance and a negative Floating of US$ 500, that means that our current Equity will be US$ 500.

Analyzing Equity is important because it shows us how much available capital a trading account actually has.

Drawdown

It is the distance that exists between the last maximum and minimum in a given period.

In other words, it represents the longest losing streak an account has ever experienced.

For example, a DD of 30% means that, at some point, the account lost 30% of its funds.

Analyzing a Trading Account

In this case we will analyze an account registered in MyFXBook.

Drawdown – 74.34%

A DD of 74.34% is quite alarming, as it means that this account has lost 74.34% of its capital in a losing streak.

Balance – €688,548.08

The Balance only shows us the current capital of the account taking into account the closed operations.

Equity – €184,056.41

Equity reveals something interesting to us. Although the account has a Balance of almost € 700,000, it has a large negative floating.

If the owner of that account closed all his open trades today, he would only have € 184,056.41 left in the account.

Floating – €504,491.67

In this case, the difference between Balance and Equity allows us to know the size of the negative floating.

A floating of this size is worrying as it can be very difficult to recover such a significant negative volume.

What do you want to learn today?

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