Definition
The average percentage loss incurred on your losing trades.

Formulas

• Stocks: Avg % on Losers = (Sum of % Losses on Losing Trades) / (Number of Losing Trades)
• Forex: Avg % on Losers = (Sum of % Losses on Losing Trades) / (Number of Losing Trades)

Examples
Stocks Example

• Trade 1: Investment of $1000, Loss of $150 => -15% return
• Trade 2: Investment of $1500, Loss of $200 => -13.33% return
• Trade 3: Investment of $500, Loss of $30 => -6% return
• Avg % on Losers: (-15% – 13.33% – 6%) / 3 = -11.44%

Forex Example

• Account Balance: $5000
• Trade 1: Loss of $100 => -2% return
• Trade 2: Loss of $300 => -6% return
• Trade 3: Loss of $75 => -1.5% return
• Avg % on Losers: (-2% – 6% – 1.5%) / 3 = -3.17%

Key Points

• Risk Assessment: Helps evaluate how much you typically lose, in percentage terms, on unsuccessful trades.

Considerations

• Investment vs. Account Balance: The percentage loss calculation differs for traditional investments vs. forex trading:
  • Traditional Investments: Percentage loss is calculated based on the trade’s specific investment.
  • Forex: Percentage loss is often calculated based on the overall account balance before the trade took place.