Been looking at my trading performance data and noticed some patterns that seem off balance.
Most of my trades cluster around smaller profits but I have these occasional big wins that stretch way out.
How do you identify when your data distribution is actually right-skewed versus just normal variance?
Check your win rate against average win/loss sizes to spot right skew.
If you’re getting tons of small wins but a few big ones are boosting your average, that’s right skew. Your median profit per trade will be lower than the mean.
Plot your monthly P&L to make these patterns way easier to see.
Sort your trades by profit and check the quartiles. If your top 25% has a much wider range than the bottom 75%, you’ve got right skew. Most trading platforms show the skewness coefficient automatically. Anything over 0.5 indicates right skew; below that, it’s likely just normal variance. The real question is whether those big wins are due to skill or just luck.
Right skew happens when extreme values create a long tail that pushes your average above your median.
I check this monthly by comparing mean and median profit per trade. If the mean’s way higher, I’ve got right skew.
The 80/20 rule works too - if 20% of my trades generate most profits, that’s textbook right skew.
I also watch standard deviation. High SD versus mean usually means outlier trades are skewing everything. I’ve used this method for years to figure out if my strategy actually works or if I’m just hitting lucky streaks.
Check your profit histogram. If most trades are on the left with a long tail to the right, that’s right skew.