What profitability is good enough?

Discussion in 'Strategy Development' started by vovchikpdx, Jan 27, 2008.

  1. What profit per trade will you consider allright for a trading system? Say, in percentage points.

    I am trying to gauge an intraday system for equities with holding period 3-4 hours.

    Thank you.
     
  2. ronblack

    ronblack

    Your average profit per profitable trade is your odds of winning. It also greatly matters what the size of your edge is. The edge is the expectancy of your method or system. Better read the first article on this page:

    http://www.tradingpatterns.com/About_Us/articles/articles.html

    "Relation of Expected Gain to Kelly Formula"

    Ron
     
  3. Not all trades will make profits.
    So it depends on two things:

    a. Winners/losers ratio.
    b. Profit made in winners vs. losses made in losers.

    Over a year you should make more NET profits than bonds offer (6.5%)
    Generally speaking from 10-15% yearly is quite good, and 20-25% is outstanding.