Average loss
Shows the average size of trades that closed in loss.
Average loss looks only at trades that finished below zero and shows the typical damage from a losing trade. The number is shown as a loss size, so it is easier to compare with average win.
It helps understand how expensive mistakes or normal losing trades are. Read it next to average win, win rate and account size, because the same $100 loss can mean different things on different accounts.
Smaller is not automatically better if it comes from cutting every trade too early, and larger is not automatically worse for a style with rare losses and large wins. Still, when average loss is much bigger than average win, the system needs a higher win rate to stay positive. Outlier losses can pull the average up sharply.
Example: losing trades close at -$40, -$60 and -$100. Average loss is ($40 + $60 + $100) / 3 = $66.67. With an average win of $80, one typical winner more than covers one typical loser; with an average win of $30, it does not.
How we compute it
We include closed trades with negative net P&L and average the loss magnitude. Net P&L always includes profit, commission and swap.