Analytics

Understanding Skill Attribution: SQN & Edge Ratio

Learn how Practice—Process measures whether your trading results come from genuine skill or fortunate variance.

Skill attribution metrics help you determine whether your trading results reflect genuine ability or market luck. Practice—Process calculates two key measures: System Quality Number (SQN) and Edge Ratio.

System Quality Number (SQN)

SQN measures the consistency of your trading edge. It is calculated as:

(Mean R-Multiple / Standard Deviation of R-Multiples) x Square Root of Number of Trades

How to Find Your SQN

1Navigate to Analytics then Skill Attribution

2Your current SQN is displayed at the top of the dashboard

3Below it, a rolling 50-trade SQN chart shows how your system quality changes over time

Interpreting Your Score

Below 1.6: Your system is not consistently profitable—focus on refining your rules

1.6 to 2.4: A workable edge exists but requires strict discipline

2.5 to 4.9: Strong, consistent performance—suitable for confident position sizing

5.0 and above: Exceptional consistency, rarely sustained long-term

Filters

Use the strategy and instrument filters to see SQN for specific subsets. You might discover that your breakout strategy scores 3.2 while your reversal strategy scores 1.4—valuable information for capital allocation.

Edge Ratio

Edge Ratio measures entry quality by comparing how far trades move in your favour versus against you in the initial phase after entry.

How to Read the Edge Ratio Chart

1Navigate to Analytics then Skill Attribution and scroll to the Edge Ratio section

2The chart plots the ratio of average Maximum Favourable Excursion to average Maximum Adverse Excursion over time from entry

3Values above 1.0 indicate that your entries are better than random

What the Numbers Mean

Below 0.8: Your entries are actively harmful—price moves against you more than in your favour initially

0.8 to 1.2: Neutral entries—no clear edge at the point of entry

Above 1.2: Genuine entry skill—price tends to move in your direction from the start

Using Both Together

High SQN, low Edge Ratio: Your trade management compensates for poor entries. Work on timing.

Low SQN, high Edge Ratio: Good entries, poor management. Work on stops and targets.

Both high: Your system is strong across the board.

Both low: Start with entry refinement, as it creates a foundation for everything else.

For a deeper explanation of the statistical foundations, read our blog post on [Skill Attribution: SQN & Edge Ratio Explained](/blog/skill-attribution-sqn-edge-ratio).