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Hello List,
I was just wondering. Does anyone use the Average Win/Average Loss ratio
from the system's Summary Report? If so, then how it can be used to any
useful purpose?
This might be a weird question to ask, I know. But I was just testing for
various trading setups. Lets see, Ive got 2 setups that show me the
following:
Net Profit Total trades Winning Trades Losing trades Avg Win/Loss
-91 2 1 1
0.91
587 7 5 2
0.55
I know this is hardly usable since the 1st setup has only 2 trades. But just
as an example...
Setup # 1 has a much better Avg Win/Loss than #2 (0.91 vs 0.55) and yet it
can well be in the negative...
Setup # 2 has less than breathtaking Avg Win/Loss but, hey, isn't 587 nicer
than -91?
Does Avg Win/Loss tell you anything. Or, should it be used only in
conjunction with something else (for example, Net Profit in the positive AND
a nice Avg Win/Loss, etc.)
I also have a 2nd question. This one can be a bit tricky...
Lets suppose I'm testing yet another trading setup. It's more or less ready,
has all those results nicely lined up. Next step, I want to add a FILTER to
my setup. Lets say this filter is that the price action takes place above
Mov(C,100,S), whatever. Lets say I somehow suspect that if I use this
filter, my setup could be overall less profitable, (some entries after all
have been filtered out), yet the remaining entries would bring more profit
per good entry than loss per bad entry.
Is there any way at all I could figure it out ?
a) Avg Win/Loss? That would be the natural way to go... But those figures
bring in those weird results as shown above.
b) a simple Hit Rate? (winners divided by losers) But this is also hardly
usable... for obvious reasons - you could end up having a lot of small
winners, and a few large losers.
Please advise.
Thanks,
Yarroll
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