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Forex strategy using the Sharpe ratio How to evaluate the effectiveness of a trading system or strategy in the Forex market Sharpe ratio: nature, calculation formula, practical examples of calculations manually with Excel How to evaluate the effectiveness of the strategy? Profitability is not the main indicator, since with high performance the risks increase. Evaluate the effectiveness of the capital management strategy depending on the level of risk allows the Sharp ratio, which is used to analyze the company's economics in the stock and currency markets. Its application allows you to compare how much higher the risk of the proposed strategy is compared to risk-free investments and whether this risk is worth the income obtained.
What is the Sharpe ratio, how it is calculated, a Mexico Mobile Number List practical example of comparing the effectiveness of the two strategies with calculations in Excel, you will find all this in this summary. Evaluation of the efficiency of the trading system using the Sharpe coefficient Tell me, how do you evaluate the effectiveness of the trading system (strategy, advisor)? As practice shows, beginner traders do not think about it. They just start trading with a strategy on a demo account: made profits, effective strategy, merged deposit, ineffective. Professional and successful traders begin to analyze the equity curve, test the strategy on different currency pairs, evaluate the ratio of profitable and unprofitable trades, maximum drawdown, etc.
More detailed information on analysis methods, here ). And there are those who remember: the greater the benefit, the greater the risk. The question arises: how to develop an optimal strategy in terms of profitability and risk? What is better: minimum or maximum benefit and risk? Here the Sharpe ratio comes to help. From this summary, you will learn: What is the Sharpe ratio, why and when it is used. How to manually calculate the Sharp ratio. A practical example of evaluating the effectiveness of the strategy. Improved Sharpe ratio (modifications and additions to the tool). What is the Sharpe ratio Suppose there are two investment strategies: bank deposits with an interest rate of 8% per year and investments in cryptocurrencies, where the annual return can be more than 1000%. In terms of profits, investments in cryptocurrencies seem more attractive, but let us remember that in 2018 BTC lost more than 80% of value, while bank deposits brought their investors a stable annual return.
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