Analysis of Reddit Post: Relative Metrics vs Absolute PnL for Trading Success

This analysis is based on a Reddit post [0] discussing the importance of relative metrics (percent gains, win-loss ratios) over absolute profit-and-loss (PnL) in trading. Relative metrics help evaluate capital efficiency—for example, a $50 gain on $5k (1% return) is more efficient than $100 on $20k (0.5%) [4]. The Pattern Day Trading (PDT) rule mandates $25k minimum equity for pattern day traders [1], which the post mentions as a reason to move to a $30k margin account. Account size significantly impacts trading flexibility: smaller cash accounts (like $5k) restrict frequency due to settlement delays, while larger margin accounts (like $30k) allow more trades but carry leverage risks [6]. Most retail traders cannot replicate exceptional results like Ross Cameron, as his performance is not typical [3].

1. Relative metrics reduce overtrading and emotional decisions by focusing on consistent small gains (0.5%/day) [4].
2. The PDT rule acts as a barrier to entry for traders with <$25k, limiting access to day trading [1].
3. Account size directly influences trading flexibility and risk-adjusted performance [6].
4. Realistic expectations (avoiding unrealistic targets) are critical for long-term trading success.

• Leverage in margin accounts increases the risk of margin calls and losses [6].
• The PDT rule restricts trading for small account holders, forcing them to either trade less or take on leverage [1].
• Chasing unrealistic gains (like 1%/day) leads to overtrading and emotional decisions [4].

• Using relative metrics improves position sizing and risk management [4].
• Small predictable gains (0.5%/day) lead to consistent performance over time [4].

This analysis provides objective context for traders:

• Relative metrics (percent gains) are superior to absolute PnL for evaluating strategy effectiveness.
• The PDT rule requires $25k minimum equity for pattern day traders.
• Account size impacts trading flexibility—larger accounts allow more frequent trades but require careful risk management.
• Most retail traders cannot replicate exceptional results like Ross Cameron.