Although the temptation to create daily trading totals for yourself will be high, know that this will simply encourage bad trading habits that will ultimately do you more harm than good.

Having this data will ultimately help you determine if the plan you have created is going to be effective in the long term. 

Depending on your own trading style, you will likely discover more relevant measures that tend to place a greater emphasis on overall earnings or the percentage of profitable deals.

If you have a higher amount of acceptable risk, then you will likely want to consider your total profit amount and if you are prioritizing consistency over general profits then percentage of trades successful is a better metric for success.

Create a performance report

You will use the data you have record to create a performance report relating to the trading plan or strategy that you are currently using.

This report will let you take a critical look at the rules you are using the determine your trades and determine how it is likely going to continue performing over a set period of time. Creating a performance report will help you understand the historical volatility of your plan. 

When getting started with a performance report, the best place to start is by creating a summary of the metrics that you have collected over the past few weeks.

Ideally, we would like to include information on each completed trade, whether it was a put or a call, the time and data at which it occurred, and the overall results of the trade. While it will be tempting, you will find that avoiding daily data will make it easier to see the forest for the trees. 

Keeping a broader focus will help you determine not just the amount you are making overall but also why certain trades failed while others succeeded. Taking the time to do so can make it easier for you to turn fluke instances of success into patterns instead.

To determine your performance, you will also need to check the graph of your performance. This graph can be viewed as a bar graph or as the so-called equity curve, although the bar graph will be illustrative enough to tell you right away what you need to know.

Options trading results to focus on

When it comes to sorting through all of the data that is available to you, you will find it easier to focus of a few major indicators and then let the rest fall in line as expected. 

Total net profit: When it comes to determining your total net profit, you are looking to determine at the highest possible level if the plan or strategy that you were using was a success or failure because it determines whether or not you made more money than you lost. To find this number you simply take your total amount of gains and subtract from that the total amount you lost while also taking into account commission costs and any other relevant fees. This will tell you if you are on the right course or if you need to scrap everything and start fresh.

Profit factor: Once your total net profit is facing the right way, the next thing you are going to need to consider how much you are likely to make on your plan per dollar spent assuming everything else remains equal. To find this number, you simply take your total profit number and divide it by the total amount of any losses you had. This number needs to be above 1 in order to indicate a profitable plan and anything higher is extremely profitable. 

Percent profitable: You can think of the percent your plan is profitable as how likely you are to win at any given trade. To determine what the number is you simply take the number of trades that ended in success and divide it by the total number of trades that you attempted. There is no target number in this scenario, as the right number depends on whether you prefer major gains and higher risks, in which case you should aim for few trades with higher margins; or you will want a high number if you prefer lots of small, safe trades.

Trade average net profit: The trade average net profit is the amount you are likely to make on each trade you complete, given your past history of trading. To find this number all you need to do is divide the total amount of profit you made by the total number of trades, regardless of whether or not they were ultimately successful. This number should be positive, and ideally, the higher the better. 

If the number ends up being negative, then you need to stop trading until you come up with a plan that is somewhat more effective. If you want to calculate this number, it is important to exclude all operations performed that were extremely anomalous with respect to all other operations, as they can alter this number to the point of irrelevance. 

Different types of Options

There are several types of options that have come into existence as traders and companies become more competitive. It is a rapidly growing market and offers the opportunity to speculate while potentially making a lot of money. Of course, it is also possible to lose money!

One Touch

If you purchase this option, you will be offered a fixed amount. If the share price touches or goes over that figure at any point during the period before the expiration date you will receive the agreed maturity value. Of course, if it does not touch the figure you will lose your investment.

Binary Options

This is a more challenging option and will require more knowledge of the market. When you purchase a binary range option you will need to tell the seller the range that the share price will stay within, throughout the course of the option. If the share price moves outside your chosen range at any point between the time of purchase and the expiration date you lose your investment. If it stays within the range you will receive the agreed maturity amount. The longer the period until expiration the more difficult this is!

One of the greatest advantages of this type of trading is that you always know what you have at risk. The most you can lose on any one transaction is the figure you purchased the binary option for. You will stand to gain the exact figure you have agreed before you started trading. This should men you never risk more than you can afford, and, if you stick to a plan, can actually generate a good rate of return.

The obvious risk is that the addiction to winning will mean you keep purchasing binary options long after you should have stopped; it can cost you a significant amount of money.

As most binary options offer a reward of less than the initial investment you will need to be right more times than wrong to stand a chance of breaking even or returning a profit. Discipline is essential to achieve this.

As with any type if investing, this particular version of options trading has advantages and disadvantages; this should not stop it being a part of your investment strategy and overall portfolio. But it must be approached as a professional in a business manner; there is no room for a frivolous attitude to this type on investing; it will end up costing your money!