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  • Strategy Testing

    What win rate and risk to reward ratio makes a strategy "good"? What should I be aiming for when testing a system? Is it possible to have a win rate as high as 60 percent with a 1:2 risk to reward strategy or should I aim lower.

  • #2
    Is it possible to have a win rate as high as 60 percent with a 1:2 risk to reward strategy or should I aim lower - yes it's really really damn possible anyway. But I do not recommend you to fix yourself on some systems or something like that. Do all manual.

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    • #3
      Gholbizel is right. Do not push yourself to a fixed risk to reward ratio. Feel comfortable with your strategy first and then improving the ratio will come along.

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      • #4
        Originally posted by Pattybear View Post
        What win rate and risk to reward ratio makes a strategy "good"? What should I be aiming for when testing a system? Is it possible to have a win rate as high as 60 percent with a 1:2 risk to reward strategy or should I aim lower.
        What you should look is the expectancy curve. A quick search on google will bring up lots of answers.
        https://blackstonefutures.co.za/why-...-rate-succeed/

        60% and a 1:2 is awesome! and not easy to obtain. If you have one, lucky you! All the best.
        Last edited by nfx; 09-24-2019, 12:06 PM.

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        • #5
          Most of my acquaintances are focused on the percentage of profitable deals at least 50%. If you get more, it's great, if you can judge less that something went wrong. Maybe you are tired, or it is time to change or update your strategy. By the way, it is really necessary to do it periodically, because the market is also reconstructing because of its activity and sometimes it is useful to introduce new indicators or approaches to discover new opportunities.

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          • #6
            First of all, it is essential to decide on your strategy. The choice must first be based on your understanding of the workflow and your convenience to you. You can then adjust the risk/profit ratio yourself when you have mastered one strategy well. If you rush from strategy to strategy, in the end, you will lose valuable time and will not learn to trade adequately. Your winning rate may reach 60% when you risk a reward of 1:2, which is even very good, but over time I think you will reduce your winning rate to 55%. For beginners, if the winning trades percentage is above 50%, that's a win. So if this strategy suits you, then use it and develop in its understanding.

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            • #7
              It's good that you're interested in this issue, because there are always traders who are not very attentive to this issue, and work almost by luck. And that's really not the right format, because it's the risk assessment and statistics that allows you to assess in time whether you're doing everything right or, on the contrary, giving up some things that don't bring you the results you want. And there's nothing wrong with that, because if you just blindly follow some general things - that won't make you a professional. But it seems to me that a ratio of at least 60% with a competent application of stop-loss is already a stable indicator that will definitely provide you with high profits.

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              • #8
                It seems to me that really all traders to some extent try to understand this question - because it has a direct bearing on your efficiency in the market and it's really meaningful.
                I don't hide that I've done it either, and in my time I paid attention to several important parameters.
                You really shouldn't devote more than 3-4 weeks to testing an approach or strategy - it's not worthwhile. And if you're trading full-time - then you may as well limit yourself to a week - you see that there's no result - try something else.
                Regarding efficiency I've read a lot of things 50%, 65%, 80%, etc. on the list. Here I think it all depends on the size of the capital - the larger the amount - the more likely to get money.

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                • #9
                  To determine this point, it is enough to study the chosen strategy well, as a rule, in the description and in the mechanism itself, you can find the answer to this question. It is no coincidence that you drew attention to 60% - because this is really an average indicator for most strategies. If you see numbers of 90% and above, this is already an obvious advertising move or even a fraud, because if such effective strategies would have all been real millionaires for a long time or the market would have changed its benchmarks and we still would not have been able to quickly adapt to these conditions. So take another look at your data and if you see such indicators, then I can congratulate you - you are already on your way to great results.

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