Definition
The average dollar amount of loss incurred on your losing trades.
Formula
Avg $ on Losers = (Sum of Losses on Losing Trades) / (Number of Losing Trades)
Example
Let’s say you made the following trades:
- Trade 1: Profit of $200
- Trade 2: Loss of $120
- Trade 3: Loss of $75
- Trade 4: Profit of $180
- Trade 5: Loss of $200
Your Avg $ on Losers would be: ($120 + $75 + $200) / 3 = $131.67
Key Points
- Risk Assessment: Helps you evaluate how much you typically lose on unsuccessful trades, highlighting potential areas for risk management.
