Performance Management (Metrics)

[DanFrank]

Hello,

I've been a long time silent reader of these forums. Learning something new everytime I log on.
My full time job is performance management / Business improvements based. With this in mind I'm a planner, and have been doing so for a few months now before even staking £1 on the market.

I'll be running my new 'business venture' as I would any other, with Visual Management of metrics being fundamental. In the link below are the metrics I'll be monitoring daily (yellow), with the others being used for calculation purposes only.

The metrics will be displayed on my 'trading office' wall. (second image).

Any thoughts on my approach would be great. Am I going OTT? :smart:

Regards
Dan

 

[chilltrader]

Hello,

I've been a long time silent reader of these forums. Learning something new everytime I log on.
My full time job is performance management / Business improvements based. With this in mind I'm a planner, and have been doing so for a few months now before even staking £1 on the market.

I'll be running my new 'business venture' as I would any other, with Visual Management of metrics being fundamental. In the link below are the metrics I'll be monitoring daily (yellow), with the others being used for calculation purposes only.

The metrics will be displayed on my 'trading office' wall. (second image).

Any thoughts on my approach would be great. Am I going OTT? :smart:

Regards
Dan

:clap: :clap:

This is the type of useless management gimmicks which are ruining the country .

Are you working for the NHS by any chance? :cheesy:

 

[DanFrank]

No not the NHS, although I know they are a bad example of how a business should be run using Improvement principles (Lean & Six Sigma). I think something has gone wrong at the top!

 

[zupcon]

Hello,

I've been a long time silent reader of these forums. Learning something new everytime I log on.
My full time job is performance management / Business improvements based. With this in mind I'm a planner, and have been doing so for a few months now before even staking £1 on the market.

I'll be running my new 'business venture' as I would any other, with Visual Management of metrics being fundamental. In the link below are the metrics I'll be monitoring daily (yellow), with the others being used for calculation purposes only.

The metrics will be displayed on my 'trading office' wall. (second image).

Any thoughts on my approach would be great. Am I going OTT? :smart:

Regards
Dan

I think you should possibly give serious consideration to both the frequency at which you calculate these metrics, and the possible psychological effects the numbers you derive can have on your trading.

 

[the blades]

I think you should possibly give serious consideration to both the frequency at which you calculate these metrics, and the possible psychological effects the numbers you derive can have on your trading.

yes, I've been here before in a previous life.

If you're not careful you'll find you're taken over by managing the measures themselves (6 SIGMA being a good example, where the tool becomes the end and not the means if you're not careful).

As one currently suffering from paralysis by analysis, I'd guard against the use of too many unnecessary numbers.

I generate **** loads of unecessary numbers (thankfully automatically), but the one that matters is my account balance at the end of the month. Keep an eye on that and a quick summary of what went right and what went wrong, IMHO.

UTB

 

[DanFrank]

The Blades

This is the type of response I was hoping for. Someone who's been there, done it and found out its not really necessary in this game. Learning from other peoples mistakes is as good as doing it yourself as long as you understand why it went wrong and how not to follow in their footsteps.

I've obviously read a lot over the past few months and have tried to pick out what I need to do to succeed at this. I know that one of my biggest weaknesses is logging down what I'm doing and have to backfill gaps sometimes. This won't be good enough if I want to develop my methods over time. Thanks for your input.

Dan

 

[0007]

yes, I've been here before in a previous life.

If you're not careful you'll find you're taken over by managing the measures themselves (6 SIGMA being a good example, where the tool becomes the end and not the means if you're not careful).

As one currently suffering from paralysis by analysis, I'd guard against the use of too many unnecessary numbers.

I generate **** loads of unecessary numbers (thankfully automatically), but the one that matters is my account balance at the end of the month. Keep an eye on that and a quick summary of what went right and what went wrong, IMHO.

UTB

Couldn't agree more. (Just wrote a screed saying same but managed to delete it by mistake). My gut feeling is that Dan has a fine but unnecessary scheme.

If you like spreadsheets and stats like i do, it's dead easy to expend more effort on the stats than on trading. You (I mean I) have to fight it. You can however, with the right figures, prove you've been trading correctly even when you've made a loss - now thats quite uplifting, until you look in your wallet!

I agree that the most important stat is what you've got in your account (and is it getting bigger?). When you are consistently profitable beyoind your wildest dreams you will have time to play with all the metrics etc: but you probably won't want to then - it's nicer on the golf course.

Stats & metrics are no exception to everything connected with trading (and life) - keep it simple.

 

[the blades]

it's a great discussion and resonates with me at this time.

Dan - you've highlighted your weakness - not logging what you're doing - hence it's difficult to measure what went right and wrong. Concentrate your efforts on this, I'd suggest. It's an enormous weaknes of mine, so if you have any tips....


007 - bang on about spreadsheets. No doubt a wonderful and essential tool (for me), but also a major cause of my "paralysis".

UTB

 

[TheBramble]

DF, you've caught me at a bad time. Ditch all the 80's management efficiencies and business improvement stuff. I had a stomach full of that at the time – and I even thought it worked back then. It doesn’t. Never did. And doesn’t now. And it especially wont work in trading. It’ll take you down all the paths you don’t need to be going and waste your time while kidding you you’re doing the most important thing.

Forget the journals and plans and processes and procedures and formulas and monitoring tools. Just get a simple system that works and trade it. Everything else is superficial and quite useless. Unless your trading isn’t working out when it becomes your central focus and obsession (to keep you from thinking about the awful truth).

 

[DanFrank]

The Bramble

Hope the bad time your going through passes quick. I'm 27, only a young'un in the 80's

I'm glad this thread got a bit of interest, i now know who the stats lovers are so I can bounce of you's and get my fix when necessary. Thanks for the input.

Regards
Dan

 

[TheBramble]

I meant going through a bad time with this metrics stuff on another thread.

I'm only 27 too. Started young....

 

[Chorlton]

As one currently suffering from paralysis by analysis

Make that TWO people, as I've just realised that I too am now suffering from this

 

[DanFrank]

I meant going through a bad time with this metrics stuff on another thread.

I'm only 27 too. Started young....

I was expecting you to be a older with your earlier comments. The reason the business improvements methods fail is due to culture/behaviour. We're only just starting to become mature enough as a business to begin using the tools properly and we've used them and watched them fail a number of times over an 8year period. We're learning quickly though that to keep up with the competition its the only way to do business (I've found out not so much in trading), but the sustainment of them will only come when you nail the behaviour issues.

Anyone work for a medium - large trading company? How do they keep tabs on their business?

 

[the blades]

I was expecting you to be a older with your earlier comments.

He's pulling your leg. Bramble was at this when Jesus was a lad.

Until recently I worked for a medium sized company within a multi-national.

We were originally strangled by measures. We culled them by asking the question - does this directly impact Quality, Cost or Delivery - and if not, why bother? Unfortunately in a corporate environment you also are obliged to do the fluffy compliance stuff - most of it is just guff and thankfully as a trader, you've only yourself to worry about.

UTB

 

[trendie]

Make that TWO people, as I've just realised that I too am now suffering from this

room for one more?
I use stats to "prove" to myself that my losses are justifiable to my head, but the raw pip-count is felt in my gut.

 

[the blades]

Thats why I came up with the metrics I did. I work with Quality, Cost, Delivery, Leadtime & the fluffy People measure on a daily basis. These didn't seem to fit with the trading environment so I changed them to suit. I want to know

a) Am I making money (Capital)
b) Is my system working (Efficiency)
c) Am I sticking to my risk plan (Money Management)
d) How long is it taking to make any profits (Profitability)
e) Am I improving over time or overtrading (Experience)

I will remove some when I deem them useless but I think they will add value to my trading plan therefore beneficial in the long run.

In the end Dan there's nothing wrog with what you suggest - and it will satisfy your appetite to measure which is probably a beast that needs feeding. I think the short of it is just make sure managing your measures takes only a few percent of your "trading hours", and remains the means and not the end.

UTB

 

[TWI]

Max risk per strategy/sector or per trade and max drawdown per month.
Once you build up a few months you start to calculate your volatility of returns to see how your risk/reward looks.
Better to spend time on making money from the present time than dwell on how well you did or did not do in the past. If you make money over time you are doing somethign right, if not you stop and realise you should not have started in the first place.
Most important is to have a plan already in place, with metrics already decided and then stick to it.