"How am I doing?" is the most basic question a trader can ask. And most traders answer it with a single number: their P&L. That's like evaluating a business by looking only at revenue. You miss costs, margins, trends, risks, and sustainability. P&L tells you the outcome. Performance analysis tells you why — and whether it's repeatable. ## The Four Layers of Trading Performance Good performance analysis works in layers, from surface-level outcomes down to behavioral roots: ### Layer 1: Profitability Metrics (The Outcome) These are the numbers most traders already track. They tell you WHAT happened. **Net P&L** — Your bottom line. Total profits minus total losses minus all costs (commissions, fees, funding, slippage). **Gross P&L** — Profits minus losses BEFORE costs. The gap between gross and net tells you how much fees are eating. **Win Rate** — Percentage of trades that were profitable. Useful but misleading in isolation — a 30% win rate with 3:1 reward-to-risk is excellent; a 70% win rate with 0.3:1 is terrible. **Average Win vs Average Loss** — Your reward-to-risk ratio in practice (not theory). Divide average win by average loss. Above 1.0 means your winners are larger than your losers. **Expectancy** — The most important single metric. Your average P&L per trade. Positive expectancy means you have an edge. Calculate: `(Win Rate × Avg Win) - (Loss Rate × Avg Loss)`. **Profit Factor** — Sum of all winning trades divided by absolute sum of all losing trades. Above 1.0 means you're profitable. Above 1.5 is solid. Above 2.0 is excellent. ### Layer 2: Risk Metrics (The Safety) These tell you HOW SAFELY you're making (or losing) money. Two traders can have identical P&L with wildly different risk profiles. **Maximum Drawdown** — The largest peak-to-trough decline in your equity curve. This is your worst period. If your max drawdown is 40%, you experienced a 40% decline at some point. **Recovery Factor** — Net profit divided by maximum drawdown. Higher i