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> The K-ratio isn't worth the space it takes up: RRR is simpler.
care to elaborate?
gerryjoz wrote:
> In an earlier post, expectancy was associated with profit factor.
> It is more closely related to payoff ratio.
> In Van Tharp's book, 2nd edition, "Trade your way...", page 204 et
> seq, he calculates
> Expectancy = average profit/ # trades
> divided by average loss.
> Payoff ratio is average profit/average loss,
> so
> Expectancy = payoff ratio/# trades.
> --which can give very low numbers, and makes the concept rather
> dubious if you are using it as an absolute value for comparing systems
> with different numbers of trades. It might be better to use trades per
> annum.
> To be fair Van Tharp only gives that way of calculating expectancy as
> a default if the risk of a trade isn't able to be calculated taking
> into account a pre-determined proportion of equity. For that, you need
> to read the whole chapter.
> Personally i find CAR/MDD, RRR more relevant, along with the raw
> Payoff ratio.
>
> The K-ratio isn't worth the space it takes up: RRR is simpler.
>
> regards
> Gerry
>
>
>
>
>
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