The Metrics That Matter — Return, Risk, Risk-Adjusted

Return metrics

Total return (day 19) and CAGR (the smoothed annual rate). Both are meaningless without their risk context: +30% with −50% drawdowns is a different animal than +20% with −8% drawdowns — and the second compounds better (day 32's recovery asymmetry).

Risk metrics

Max drawdown (depth), time-underwater (duration), volatility (standard deviation). Sharpe ratio = (return − risk-free) ÷ volatility: return per unit of bumpiness — the standard comparison metric (>1 good, >2 excellent, but beware Sharpe computed on smoothed/faked data). Sortino: like Sharpe but penalizing only DOWNSIDE volatility — closer to what investors actually fear.

The trading-specific set

Expectancy per trade (day 31), win rate + average R multiple, profit factor (gross wins ÷ gross losses; >1.5 healthy, >2 strong), and plan fidelity (day 59). A dashboard of these six tells you more about a trading operation than any single return number — and the journal (day 38) is where they live.

Sources

• Sharpe RatioInvestopedia
• Sortino RatioInvestopedia