Is this a satisfatory setup? | Forex Factory

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Is this a satisfatory setup?

  • #1
  • First Post: Jun 11, 2007 7:59pm Jun 11, 2007 7:59pm
Hey, I have a quick question. I'm backtesting something and I'm getting a 55% winning percentage with wins 4x the size of losses. Is this a satisfatory setup? Or should the win% be higher?
  • #2
  • Jun 11, 2007 8:05pm Jun 11, 2007 8:05pm
win % is such a small factor in determining overall quality of a system(you can have a win% of <50 and still have a great system.

If you calculate the expectancy of your system, it will give you a better overall idea of what your system is producing. Then you can compare future systems against one and another.

Best of luck,
Mike
  • #3
  • Jun 11, 2007 10:48pm Jun 11, 2007 10:48pm
1. Frequency?

2. Your age?

Then I will know when can I expect to see your name on the headlines.

Cheers.
凹凸 only
  • #4
  • Jun 11, 2007 10:53pm Jun 11, 2007 10:53pm
Quoting aicccia
Hey, I have a quick question. I'm backtesting something and I'm getting a 55% winning percentage with wins 4x the size of losses. Is this a satisfatory setup? Or should the win% be higher?
the win % should definetely be higher. you should keep plugging in values until it predicts the past with 90% accuracy:
Relax and be happy.
  • #5
  • Edited 4:35pm Jun 20, 2007 9:38am | Edited 4:35pm
I think it's a satisfactory set up. Plug in those numbers into this simple monte carlo generator, set the number of iterations to 1000 lines or greater, and you can see a nice upward slope.
  • #6
  • Jun 20, 2007 10:47am Jun 20, 2007 10:47am
Quoting mbqb11
win % is such a small factor in determining overall quality of a system(you can have a win% of <50 and still have a great system.
I ABSOLUTELY disagree. The psychological damage of any system in which most trades end up being losers is utterly devastating. Whoever says otherwise hasn't traded real money.

HOWEVER, if it's an automated system and you can indeed sustain a 4:1 risk/reward ratio, then I'd say go for it.
  • #7
  • Jun 20, 2007 11:03am Jun 20, 2007 11:03am
Quoting WTB
I ABSOLUTELY disagree. The psychological damage of any system in which most trades end up being losers is utterly devastating. Whoever says otherwise hasn't traded real money.

HOWEVER, if it's an automated system and you can indeed sustain a 4:1 risk/reward ratio, then I'd say go for it.
If you are speaking for yourself then that is fine and understandable. But everyone has different psychological hang ups, and mine certainly has nothing to do with win %. And yes I trade real money
Anyway what I was getting At was expectancy, but people tend to want to overlook important things anyway.


Best,
Mike
  • #8
  • Jun 20, 2007 12:38pm Jun 20, 2007 12:38pm
Quoting mbqb11
If you are speaking for yourself then that is fine and understandable. But everyone has different psychological hang ups, and mine certainly has nothing to do with win %. And yes I trade real money
Anyway what I was getting At was expectancy, but people tend to want to overlook important things anyway.


Best,
Mike
This is absolutely true... and the famous Turtle experiment in the 80's proves this.

The Turtle system is a trend following breakout system based only on Donchian Channels. Like most trend following systems, it has a low win %age, and high win to loss ratio. For those who don't know about the story, a successful futures trader named Richard Dennis took a handful of people off the street who knew absolutely nothing about trading and trained them. About 70% of them went on to become profitable traders, with real money, despite working with a system that has a low winning %age.
  • #9
  • Jun 20, 2007 1:51pm Jun 20, 2007 1:51pm
Anything above 50% winning ratio is good, but I find it hard to beleive you will have a 4:1 ratio with every single winning trade.

Even if you have 50%, just maintain an avg of 2:1 or above, which is very doable, and you'll be fine. Eventually you'll get above 50/50.

Best wishes
  • #10
  • Last Post: Jun 20, 2007 2:23pm Jun 20, 2007 2:23pm
it's a relative question that depends on you expectations when trading forex. Do you want 100% return every year? or are you satisfied with beating the S&P 500??

As long as you're making money, i say it meets the minimum need of why we trade in the first place. But by how much, it's all up to you
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