Profit Tracker Perfection

Over a year ago I posted the groundbreaking Profit Tracker concept and getting to the real bottom line in your trading business. This week I am expanding on that post to show how to create the graph for yourself.

Trading platforms allow you to track graphically your net liquidity curve. They do this so you constantly add money to your account if you’re losing. You want to keep that curve rising don’t you? If you take profits out of your account the net liquidity curve goes south, and you look like a net loser every time you put money into your hip pocket. This encourages traders to keep adding to their trading accounts and not take any money out.

Your trading platform will provide a year-to-date dollar amount of your profits or losses (Overall P/L YTD). If it is a positive number you’re up for the year, maybe. No legitimate business would use such numbers to evaluate their real profitability. Being hoodwinked by your trading platform by looking at your annual profit and loss figures is misleading and surprisingly still legal.

Be aware that trading platforms frequently do not include commissions and fees incurred from your trades in your Overall P/L YTD figure. They don’t want you to see that you have an Overall P/L YTD of $6,500, but your commissions and fees amount to $7,500. That is, they don’t want you to readily see you paid them $7,500 this year, and you are in the red $1,000. That would be too transparent.

Enter the Profit Tracker. It’s a clear graphic view of what’s really going on under the hood of your trading business. The concept is simple. Simply create a data sheet listing your weekly P/L in column B In column C, keep a running total of your commissions and fees. Subtract column C from column B to get a running total of your real profits in column D.

Next, graphically chart your real profit from trading so you can see the actual health of your trading business. Are you green and growing? Or do you have some yellow jaundice appearing?

The Profit Tracker data table and graph is available for download at pajamatrades.com/downloads.

Staying on top of your numbers is vital to a healthy business. Use the profit tracker to see the bottom line of your trading business. You will be glad you did.

Enuf said.