Pipruit: Well, I approximately understand why we need the first point, but how will the second help us? Let’s assume that I know all that numbers and so what? Commander in Pips: I'll tell you. The first part is for analyzing of performance of all possible tools in your trading arsenal that could be tested with such table as shown below. This kind of table should be created for any context/pattern that you trade day by day. Let’s say that you are trying to assess effectiveness of trading Butterflies on EUR/USD. First you have to make description how you trade it: “1.27 or 1.618 Butterfly Buy/Sell at (Specify time frame). Enter right at completion point. If 1.27 butterfly then stop is placed (number of pips) beyond 1.618. If 1.618 butterfly stop is placed beyond for (number of pips). Target (specify target), say 0.382 retracement of overall butterfly move. Stop moves to breakeven after moving in favor of position for (number of pips). Enter in two steps with ___lots each.” Next you can fix results in table: After some observation from this table you will be able to make very important conclusions: - Is trading of butterflies profitable in general or not? - What market is most suitable for trading it? - What time frame is most suitable for trading it? - What could be adjusted in butterfly trading – profit target, risk management, lot size etc. For example you will see, that you have not won any butterflies at GBP/USD – then you can stop trading this pattern on this pair. You can see that market in 90% of cases reaches at least 50% resistance, while your profit taking usually at 0.382, so you may start to take more profit and place farther profit targets.