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Comparing this month to your best month

Everyone has a best month somewhere in their history. Good market conditions, strategy firing well, everything working. It's natural to use it as a reference. It's also a quietly bad habit.

The best month is, by definition, an outlier. It's what happens when conditions and execution both line up. Comparing every normal month to it makes normal months feel like failures, even when they're perfectly fine results for your strategy.

That comparison can push you in bad directions. Trading more to keep up. Increasing size. Taking marginal setups because the month feels behind. All the things that make a normal month worse.

A better reference is your average month, or better still, the range of your normal months. If your results usually fall within a certain range, a month in that range is a normal month, whether it's near the top or the bottom.

It also helps to look at process measures instead of results. Did you follow your rules? Was your execution score similar to usual? Were your trade counts normal? If yes, the month was fine, even if the result was below average.

Best months are nice to have. They're just not a target to chase every month.

With enough months of data, you can calculate the spread of monthly results and see how often months fall below average. It's usually more often than people feel. Knowing that roughly half your months will be below your average, by definition, takes some of the sting out of a slow month. It's basic statistics, but it's easy to forget when you're in the middle of a slow month and remembering only the good ones. Writing down the range of your normal months, top and bottom, is a quick way to keep that in view when the current month feels slow.

Looking back at what made the best month good can be useful, as long as it doesn't become a target. If it came from a specific market condition, like a strong trend in your main pair, that tells you when your strategy does best. You might be able to recognise those conditions earlier next time. That's a constructive use of the best month. Trying to recreate its result in a different market is not. Using it to recognise good conditions is fine. Using it as a monthly target isn't. Normal months are the job.

The best month as a reference sets an expectation that most months will not meet. A better reference is the median month, or an average over the last six to twelve months.

Comparing each month with the median makes it easier to see whether a weaker month is normal or a real problem. It also reduces the pressure to repeat an outlier, which often leads to overtrading.

Comparing with an average month is often more useful than comparing with the best. The best month might have been an outlier, helped by unusual market conditions. An average month, or the median, gives a fairer baseline for what to expect. If this month is below the median, take a closer look. If it's below the best month but around the median, there's probably nothing wrong. Keeping a running median of monthly results, updated each month, makes this comparison easy and less emotional. It keeps a single great month from setting an unfair standard.

Is it helpful to compare with the same month last year? Markets often have seasonal patterns, like quieter summers or busier autumns, and comparing December with last December might be fairer than comparing it with a strong October. If your results are similar to the same month a year ago, the dip might just be seasonal. If they're much worse, something else might be going on. It only works once you have a year or two of data, but it's a useful extra angle. It also stops you from chasing a number that only made sense in different conditions.