documentation WIP 1

docs/edge.md

@@ -17,6 +17,30 @@ The answer comes to two factors:
 - Win Rate
 - Risk Reward Ratio
 
-Win rate means over X trades what is the perctange of winning trades to total number of trades (note that we don't consider how much you gained but only If you won or not).
 
-<img src="https://latex.codecogs.com/svg.latex?\Large&space;x=\frac{-b\pm\sqrt{b^2-4ac}}{2a}" title="\Large x=\frac{-b\pm\sqrt{b^2-4ac}}{2a}" />
+### Win Rate
+Means over X trades what is the perctange of winning trades to total number of trades (note that we don't consider how much you gained but only If you won or not).
+
+
+<img src="https://latex.codecogs.com/svg.latex?\Large&space;W = \frac{NumberOfWinningTrades}{TotalTrades}" title="\Large x=\frac{-b\pm\sqrt{b^2-4ac}}{2a}" />
+
+### Risk Reward Ratio
+Risk Reward Ratio is a formula used to measure the expected gains of a given investment against the risk of loss. it is basically what you potentially win divided by what you potentially lose:
+
+<img src="https://latex.codecogs.com/svg.latex?\Large&space;R = \frac{Profit}{Loss}" title="\Large x=\frac{-b\pm\sqrt{b^2-4ac}}{2a}" />
+
+Over time, on many trades, you can calculate your risk reward by dividing your average profit on winning trades by your average loss on losing trades:
+
+<img src="https://latex.codecogs.com/svg.latex?\Large&space;R = \frac{\frac{\sum Profit}{NumberOfWinningTrades}}{\frac{\sum Loss}{NumberOfLosignTrades}}" title="\Large x=\frac{-b\pm\sqrt{b^2-4ac}}{2a}" />
+
+### Expectancy
+
+At this point we can combine W and R to create an expectancy ratio. This is a simple process of multiplying the risk reward ratio by the percentage of winning trades, and subtracting the percentage of losing trades, which is calculated as follows:
+
+Expectancy Ratio = (Risk Reward Ratio x Win Rate) – Loss Rate
+
+Superficially, this means that on average you expect this strategy’s trades to return .68 times the size of your losers. This is important for two reasons: First, it may seem obvious, but you know right away that you have a positive return. Second, you now have a number you can compare to other candidate systems to make decisions about which ones you employ.
+
+It is important to remember that any system with an expectancy greater than 0 is profitable using past data. The key is finding one that will be profitable in the future.
+
+You can also use this number to evaluate the effectiveness of modifications to this system.