Moving average & RSI strategy : how to find win ratio

Discussion in 'Strategy Development' started by rs2000, Mar 5, 2018.

  1. rs2000


    Hi All

    I am working on a trading strategy that go long or short based on rsi and moving average. Each time 10,000$ is invested.

    Can you please help me

    1. How to represent this portfolio on a line graph ? Shall i represent in $ terms or shall I stay at 1 and then add on the % return for each day ? The thing is that going long and then unwinding the position . And going short and then unwinding . Each time we buy/sell 10,000 worth of stocks. How to represent this on plot In order to see the performance ?

    2. How to find a win ratio ? I.e how to fix me winner and loser trader ? If I buy today and sell it a eeek later at a higher price , will this count as 1 winner trade ( alit boy I made 2 trades in market , 1 buy and 1 sell)? How shall I count trades ( a long or short pisitim )

    Please me help with this , I am stuck and finding it hard to visualize

    Many thanks
  2. tomorton


    You're finding it hard to visualise!?!?!? My god, I'm not, and it doesn't look pretty

    It is optimistic to try to implement a strategy before you fully understand it. Have you thought about running this in a demo account for just a little while?
    cvds16 likes this.
  3. tommcginnis



    Do it each way you can think of, and keep all your "editions".
    If you do 5, maybe 2 will tell a viable graphical story -- but maybe one of those will be/seem more useful one day, and the other will look better later. Do a bunch, expect to keep a limited number. LOTS of learning will be your reward.

    As a BTW, experiment with absolute price changes and logNormal (logarithmic) scaling. (And expect to keep both!) As above, one will look more applicable in one situation, the other on a different day.

    HAVE FUN. It's worth it.
    bone likes this.
  4. TonePot


    I too have trouble deciding which way is the best way. But I think tommcginnis is right. Do it every way you can think of and stick with the way you like the most. Usually there is no right answer, a lot of it is subjective.
  5. hello rc2000, first of all you need a lot of discipline for a strategy. However, if you take these four rules into account, do it a week and post here your result.

    Fixed risk - lose 2-5%, you'll be able to get over it then cancel.
    10,000 Bucks - Each Trade $ 1000, better less.
    Stop Loss point tightening at the closing price of the 5-minute candle.
    Entry into the market when crossing the moving averages 10 and 21. The 50s moving average shows you how the market tends to go up or down. Then you are looking for entry @ the retraicement.
  6. bone

    bone ET Sponsor

    IMO you'll have an easier time of gauging potential performance or in your words finding a "win ratio" when you have developed a very refined and clearly articulated methodology for taking a loss and collecting a profit. Taking an entry is but one part of a trading strategy. Good luck with everything and I agree with Tom McGinnis about trying many different variations.
  7. TonePot


    I listened to a Chat with traders ep () and he made a point about when you start with a new strat, YOU pick the RR (2:1,3:1,etc) and the market will give you your win rate
  8. rs2000


    Hi All

    thanks for your
    this particular strategy is for an assignment I am working on for my masters so its an assignment and it asks me to calculate win ratio. I was looking industry norm or most common way used to count trades, how to do I say a trade is a wintrade? when I buy it and later sell it at profit afte r a week, will it be 1 winning trade? or shall I count each day as a "trade" and the unrealized profit to find if its win or lose....
    what would you recommend.. thanks again
  9. Martingale.Enter 1 contract - stopped, enter 2 contracts - stopped,enter 4 contracts, etc...Martingale your way to a millionaire
  10. tomorton


    A winning position only becomes a won trade when you close it. That's one trade.
    #10     Mar 8, 2018
    tommcginnis likes this.