Using Excel for Risk/Reward Calculations

Discussion in 'Risk Management' started by Masterchanger, Oct 14, 2009.

  1. I'd like some feedback on the idea of taking a list of say 100 futures trades generated via a discretionary multilot trading methodology that involves an all in position entry and multilevel scale out methodology. ie one of three possibilities occur, a full position stopout, a target 1 reached on a portion of contracts and partial stop out(with reduction in stop loss from initial stop placement) on the remainder, and both targets 1 and targets 2 are hit.

    I want to use excel to generate a table of risk vs reward for various combinations of contracts with Target1 and Target2 in order to optimally trade such a system. Or to solve for optimal trade configuration based up number of contracts traded. I assume the result would be scalable to some extent, ie. if for 4 contacts the optimal would be take 3 contracts off at Target1 at 3 tics and target 2 is 12 ticks then for 8 contracts or 16 contracts the ratio would remain the same.

    I understand that using the historical trade data for future trades assumes I will remain consistant in appling the system and that 100 trades may be inadequate, if the later is the case then how many trades would be optimally analyzed?

    Thanks for taking the time to read this question and any input is welcome.
     
  2. u21c3f6

    u21c3f6

    Do you know the %'s of each scenario and % gain and/or loss?

    Joe.