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- Feb 20, 2018

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after looking at this table several times

1 $678 0.86R

2 $3,456 4.40R

3 ($567) –0.72R

4 $342 0.44R

5 $1,234 1.57R

6 $888 1.13R

7 ($1,333) –1.70R

8 ($454) –0.58R

page 159 of super trader original edition

and this paragraph

The expectancy tells you that on the average you’ll make

0.68R per trade. Thus, over 100 trades, you’ll make about 68R.

The standard deviation tells you how much variability you

can expect from your system’s performance. In the sample our

standard deviation was 1.86R. Typically, you can determine the

quality of your system by the ratio of the expectancy to the

standard deviation. In our small sample the ratio is 0.36, which

is excellent. After 100 or so trades, I’d expect this ratio to be

much smaller; however, if it remains above 0.25, we have an

acceptable system.

i managed to calculate the expectancy which gave me

MEAN R MULTIPLE/ EXPECTANCY = 0.675R

after looking online for a standard deviation calculator it gave me

1.8568329411739

however no matter how hard i tried i wasnt able to calculate the

ratio is 0.36 i would kindly ask you if you explain how did you arrive to this conclusion

i looked online and found this formula

SQN = ((Expectancy / Std Dev "R") * Square root of number of trades)

however when i did the math the result i got was

1.0340488626

thats very different from the 0.36 you got

im mainly trying to see if my system is a holy grail system

but i dont know how to calculate this

Ratio of Expectancy

to Standard Deviation of R / Quality of the System

0.16–0.19 Poor but tradable

0.20–0.24 Average

0.25–0.29 Good

0.30–0.50 Excellent

0.50–0.69 Superb

0.70 or better Holy Grail

so mainly what im trying to do is a system when i win 30% of the times but has a high risk reward ratio 1:3 .... the ratio does not change .... this is a hypothetical system that does not exist,... hence all the data giving out is purely theoretical

total number of trades 10

mean r multiple = 0.2 (based on me winning 3 trades 9r losing 7 trades -7r)

standard deviation= 1.9321835661586 based on and the following numbers= 3,3,3, -1,-1,-1,-1,-1,-1,-1

using a standard cdeviation calculator found online

the reason why i want such a small winrate is because im a noob when trading ... like fundamental and technical analisis are not my thing hence i need a low winrate than can still make me money ... as time goes by i do expect my winrate to increase but for now i wanna keep it as is ... i honestly do believe position sizing is crucial and before even seriously starting to trade or looking at technical analysis for entries... i looked at various position sizing models kelly criterion mm, john something... for this theoretical system i have a high risk tolerance i am willing to tolerate a very high drawdown so long as i get large profits fast... this may change once i start demo trading depending on the psychological impact the drawdown may have on me... this but thats the original idea .... my leverage is 1:500 if anyone could suggest any percentage of risk given my goals it would be appreciated. i am mainly looking for an aggressive percentage large gains and large drawdowns, a conservative percentage small gains and smalll dradoiwns and an in between percentage ... that gives me decent gains with decent drawdowns

if this is its too much i would at least REALLY REALLY appreciate an explanation as to how did you calculate thew 0.36 ratio as this seem like a very important number as well as how to calculate the Ratio of Expectancy to Standard Deviation of R

there is a user named howardbandy in this forum that seems to be very knowledgeable about van tharp strategies ... unfortunately it seems as thought he is no longer active, hopefully he will see this threat and give me some insight ....other than that if anyone in this forum could help me i would highly appreciate it