Which would you rather trade

Hi all,

I don't want to appear like a party pooper, but did any of you ever hear about drawdowns, not unrelated to "risk of ruin"? How can you talk about backtesting for 6 years and only mention some kind of profit ratios?

nononsense

 

Agree. No party pooperism taken. Did fail to take this into consideration....
So, if it were presented to me, a system with 66 percent winners to losers with greater then 20 percent DD (off of starting capital DD, because I always start my systems at what seems like the worst time!), or a 33 percent 3 to 1 with a less then 20 percent DD (starting capital DD), then the 33 percent one may be the one I would like better.

 

You may be right, but there are enough data points that I feel it is significant. Nothing is certain.

m

 

I look at DD's and equity curve.

m

 

If i may, to continue, would you trade this:

80 percent gainers to losers, 1 to 2 ratio.......
Supposed Max DD is very small (less then 1k per car) (system has many winners in row, causing DD to be spread around ON HISTORICAL results, of course).

Is this feasible to trade for you?

 

Yes.

 

Either way is fine. As long as I win 9 times out of 10.

Hope this helps everyone
Helpful trader

 

Here's a simulation of 5,000 trades for each of the proposed methods with the same expectancy. It's pretty obvious which one of the 3 is better.

First, 33% and 3:1 r/r ratio with expectancy of 100.

 

Next, the 66% pct winner with 1:1 r/r and 100 expectancy.

 

Third, the 80% winner with 1:2 r/r and 100 expectancy.