Becoming the perfect trader is no easy task, and I daresay that nobody has been able to achieve this great feat. The perfect trader buys at the absolute low of the day and sells at the absolute high. And depending on whether the high happens first or the low happens first determines if he is long or short for the day. It’s really easy to calculate this metric. It is simply the absolute value of the daily range or the high minus the low.

To get an accurate handle on the concept, we first ask what time frame we will be using. For end-of-day traders or swing traders, the daily bar is your competition. If you day-trade off the five-minute bar, well then use the five-minute bar to gauge your performance.

This concept is used in system trading and because vast amounts of data are typically used, we system traders need to resort to our super-duper calculators, also referred to as our programming language. This is an example of what code looks like for our daily perfect trader. The language is TradersStudio’s version of Visual Basic, but you can get the idea and use it with any program you wish. It’s the basic loop function.

For i = FirstBar to LastBar step 1

Next

PerfectProfit = PerfectProfit + Range [i]

You’ll need to dimension your PerfectProfit variable as an array if you want it to tally up daily ranges.

But you don’t need to be a systems trader to get some use from the concept. You can simply take a sheet of paper and tally the sum of all the bar ranges for your time frame. Take your net profit and divide it by perfect profit for a sobering assessment of how far from perfect you really are.

If you are 20% of perfect, then you have an impressive system. Don’t be discouraged to find out you’re more in the 2% range. What they say about flyfishing applies. First you try to catch a fish (profitable trade), then you try to catch a lot of fish (consistently profitable), then you try to catch big fish (participating in large moves) and then you seek the fish that has never yet been caught.