Trade attribution is the process of separating a trade's outcome into contributing components such as strategy quality, position sizing, execution, discipline, and random market outcome.
How it works
The review compares the written plan with what actually happened and assigns deviations to specific process categories before using P&L as evidence about the strategy.
Attribution works best across a sample, where repeated execution errors can be distinguished from normal planned losses and from a rule that may genuinely need revision.
Why it matters
It prevents lucky rule violations from being rewarded as good process and prevents clean planned losses from being mislabeled as execution failures.
Attribution remains an inference. One trade rarely provides enough evidence to redesign a strategy, especially when randomness dominates the outcome.
A simple market example
A +2.4R trade taken at double the size limit after an invalid signal can receive a worse process score than a clean −1R loss that followed every rule.
Common mistakes
Calling every profitable trade a good trade.
Changing entry or exit rules after one loss without first identifying whether the problem was strategy, sizing, execution, or variance.
Frequently asked questions
What should be attributed first?
Start with observable deviations from the written plan: rule, size, order, timing, and data.
Can randomness be an attribution category?
Yes. A valid setup can lose without any process error, and acknowledging variance is essential for honest review.
When should attribution change a strategy?
When a sufficiently broad sample shows a repeated issue that cannot be explained by execution errors or ordinary variance alone.
Educational content only. Definitions describe common market usage and may vary by jurisdiction, instrument, or institution.