From f75606d2955d9ac197e55ab2e1391aa53ec46829 Mon Sep 17 00:00:00 2001 From: misagh Date: Wed, 7 Nov 2018 18:27:10 +0100 Subject: [PATCH] formulas markdown style --- docs/edge.md | 12 ++++++------ 1 file changed, 6 insertions(+), 6 deletions(-) diff --git a/docs/edge.md b/docs/edge.md index 427e37103..21a5566ab 100644 --- a/docs/edge.md +++ b/docs/edge.md @@ -24,20 +24,20 @@ The answer comes to two factors: Means over X trades what is the percentage 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). -W = (Number of winning trades) / (Number of losing trades) +`W = (Number of winning trades) / (Number of losing trades)` ### 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: -R = Profit / Loss +`R = Profit / Loss` 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: -average profit = (Sum of profits) / (Number of winning trades) +`Average profit = (Sum of profits) / (Number of winning trades)` -average loss = (Sum of losses) / (Number of losing trades) +`Average loss = (Sum of losses) / (Number of losing trades)` -R = (average profit) / (average loss) +`R = (Average profit) / (Average loss)` ### Expectancy @@ -47,7 +47,7 @@ Expectancy Ratio = (Risk Reward Ratio x Win Rate) – Loss Rate So lets say your Win rate is 28% and your Risk Reward Ratio is 5: -Expectancy = (5 * 0.28) - 0.72 = 0.68 +`Expectancy = (5 * 0.28) - 0.72 = 0.68` 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.