Help CenterStrategy Performance
This section explains a trading strategy's performance, which is essential for continued success.
- Avg. RRR (Reward to Risk Ratio)
It is the ratio of the average profit over the average loss achieved.
The higher Avg. RRR, the better.
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- If the Avg. RRR Ratio is < than 1 -> it means the strategy's average losses are bigger than the average profits.
- If the Avg. RRR Ratio is > than 1 -> it means the strategy's average profits are bigger than the average losses.
- Win vs Loss Ratio (WL Ratio)
The Win vs Loss Ratio (WL Ratio) is the ratio of the number of winning trades to losing trades. It helps traders understand if they have more winning or losing trades.
A ratio higher than 1 means the strategy has more winning than losing trades.
When this ratio is combined with the Avg. RRR, it gives a good idea of the profitability of the trading strategy.
For example, if the Avg. RRR is < than 1, but the WL ratio is > than 1 -> it means that while the strategy has more winning trades than losing trades, the strategy's losses are bigger than profits. This suggest that the trader would need to improve their risk management by reducing the USD amount they lose on losing trades.
- MRT (Max Recovery Time)
Max Recovery Time (MRT) is the longest period for a trader to recover from a drawdown to their peak balance.
This analysis helps traders understand how long it takes to recover from their drawdown in time.
For example, if the trader has an MRT of 23h, this means the trader is able to recover from their most recent largest drawdown after 23 hours.
- Return/RDD (Return to Max Drawdown) or Recovery Factor
Return/RDD (Return to Max Drawdown) measures the profit gained relative to the maximum drawdown.
It’s important to assess strategy efficiency in recovering from losses. The higher the ratio, the better the strategy.
For Example, if the trader has a Recovery Factor of 3, this means that the trader's strategy has a net profit 3 times more than their largest drawdown.