Chapter 13
Looking at the Scoreboard to Evaluate Your Performance
IN THIS CHAPTER
Calculating simple returns
Computing annualized returns
Using the time-weighted return method
Measuring up to the benchmarks
Making changes to your trading plan
Are you a swing trading star or a work in progress? The only way to know is by calculating your portfolio’s returns. You can think of your portfolio returns as the “score” of your performance, and you can think of calculating those returns (usually done monthly or quarterly) as looking up at the scoreboard to know where things stand in the game (if you’re up or down and by how much). Admittedly, calculating returns isn’t the most exciting task. But as a swing trader, you must compute your returns to find out whether you’re doing an amazing job or a lousy one.
Performance calculation can be complicated by several factors, including taxes, commissions, SEC fees, and other expenses. Cash deposits or withdrawals, which I cover later in this chapter, ...
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