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>attached are the test reports of a simple trading system trading only the
>short side of a single dow contract off the 10 min chart from jan 1 to
>march 28.
>
>the Annual system % return: increases 4 fold by reducing the Initial
>Equity in half.
>
>pick it apart.
>
> Don
Don, the first thing I saw on your $5k vs $10k starting equity is the total
dollar return is the same at $4724. This comes from trading one contract
rather than all your capital.
When the returns are calculated they assume all your capital is
invested. So the $5k starting capital will give twice the percentage gain
of the $10k because of the same dollar gain in both cases.
I didn't dig deep enough to find the other 2X...
This sort of apparent lower percentage gain also occurs when you use
a fixed dollar amount for purchases instead of all the available
capital. You end up with useless numbers. There is still work for Tomasz
in this area.
Bottom line: only fully invested capital, compounded gains produce correct
AA report numbers.
Cheers
Sid
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