This tool finds the most optimal allocation size for each trading setup. It has 3 modes.
Basic (it meets the minimum profitability requirements):
Basic (it meets the minimum profitability requirements):
- % Profitable: the probability of winning and is calculated by dividing the number of winning trades by the total number of trades.
- Profit Ratio: a measure of the ability to generate profit instead of loss and is calculated by taking the average profit from all winning trades divided by the average losses on all losing trades.
Medium (it takes into account the maximum loss to stabilize the overall risk among the partitions):
- Max Drawdown: the "worst-case scenario" for a trading period. It measures the greatest distance, or loss, from a previous equity peak.
Advanced (loss is not the only risk taken, the reward to risk ratio must also be accounted for):
- Monthly Profit: the amount of average return a system provides on a monthly basis.
- Monthly Loss: the highest loss given during the period of a month. It can be substituted by the Max Drawdown.
Notes:
- The "check boxes" inputs are there as cosmetic separators.
- "Basic" mode comes with preset values. To activate other modes, you must use a value higher than "0".
- This shows the amount of percentage you should allocate for the setup you inserted the metrics for.
- It is recommended to get values for each mode and find out on past data which works best for you.