where MAE (max. adverse excursion) is defined as |worst price trade reached – entry price|, quantity is defined as the number of contracts traded, and point value is defined as the monetary conversion of each point (e.g. 100 for currency pairs).
This statistic returns a value representing the average maximum run-down your strategy experiences. This information helps you gauge how poorly your strategy’s entry conditions predict upcoming price movement directions. A low percentage here is desirable since it would imply that the price movement after you enter a position follows the direction of your intended trade.
where MFE (max. favorable excursion) is defined as (best price trade reached – entry price), quantity is defined as the number of contracts traded, and point value is defined as the monetary conversion of each point (e.g. 100 for currency pairs).
This statistic returns a value representing the average maximum run-up your strategy experiences. This information helps you gauge how well your strategy’s entry conditions predict upcoming price movements. A high percentage here is desirable since it would imply high profitability opportunities.
This statistic returns a value that is useful in giving you a measure of how effective your exit conditions capture the price movements after your strategy enters a position. It shows you how much you give back from the best price reached before you exit the trade. A small number here is generally desirable since it would imply highly optimized exit conditions that capture most of the price movement you were after.
Enter long at $100
Market price rises to $110 so your MFE is now $110 - $100 = $10 or 10%
Market price declines to $107 and you exit your trade. ETD is now $10 - $7 = $3 or 3%
We know from the ETD that we gave back $3 in potential profit in this particular trade.
Hope this helps.
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You don't need a system that wins more than 50% of the time in order for it to be very profitable or have a nice edge. Take a look at expectancy in the wiki and read some Van Tharp books for more.
However, you may need a system that wins more than 50% of the time in order for you to trade it. I mean live with it. Day in, day out. Some trading personalities do better when they are "right" (win) more than they are wrong, and if your personality is like this, then a higher win rate is probably more important.
With a higher win rate usually comes a lower R:R ratio, meaning your reward is usually lower. Whereas a strategy that has a lower win percentage usually has a higher R:R ratio, meaning the reward is usually greater. You'll have to find the right balance for your own trading style.
Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.
Need help? 1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first. 2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses. 3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make. 4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance. 5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers. 6) Help using the forum? Watch this video to learn general tips on using the site.
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