How is the expected payoff calculated? - page 5
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Mathemat:
... You got a much smaller spread (1.7 less than 4). It's a bit liquid, the margin is too small. Or check it on a longer timeframe, maybe the results will be better.
It would be nice if the expected payoff were no less than 4, and even better, no less than 8 points (double spread).
If the spread - a cost of circulation, and evaluation of MO - a profit, then the return on costs of circulation in this case is 1.7 / 4.0 = 0.425 (42.5%), which can be considered a good indicator, at least to start. Another question is whether this is all profit (1.7) and/or all costs of circulation (4.0)?
"8 points" is a return on costs of circulation of 200% - simply awesome and super reliable. But I think this is something to strive for and further exceed.
Note: of course, spread and MO can easily be converted into a cash equivalent and get the same return on costs of circulation.
And anyway... so many minds have gathered in this thread... there's even a disagreement over the elementary question: "What's the MO??"
I didn't think this thread would grow to 4 pages ))))
Yeah, terrific. While a specific question was asked:
Good afternoon. Please advise how to calculate the expected payoff, which is displayed in the Meta Trader's tester.
And the exact answer is given:
Arithmetic mean. The profit is divided by the number of orders. Average profit per one order.
Even with links to articles, one of which was written by the lead developer of the terminal.
I would not call it profitability. It's more like a kind of 'reserve ratio', or 'cushion'.
A cushion of about 400% was the winner of ATC 2007, Better.
// ======================================================================
If I had been told yesterday that I would see this on the forum today and offered to bet on this event 1000 rubles at 1:1000 odds,
I would have said no. Honestly...
Here you go.... Get....
............
Unbelievable but true.
Don't be absurd, please. What is expected payoff - no one is discussing. The question is how to measure it.
That's the thing, as it turns out, everyone's measurements are different...
For me, it came as a surprise that there is no common ground, and in general, I've never paid attention to or taken into account ME, probably because I don't know how to measure it myself )
You can get to the zero missing between a comma and an A.
Eat some more of that sweet roll:
You can get to the zero missing between a comma and an A.
It's simple. Your total profit on 30 trades equals 50 pips. 1.7 is right, you don't need to take away the spread. But it would be nice to compare it with spread. The spread is significantly less than yours (1.7 is less than 4). It's coming out too liquid, the margin is too small. Or you might want to check it on a longer timeframe and see if your results are better.
It would be nice if the expected payoff were no less than 4, and better yet, no less than 8 points (double spread).
P.S. I will not bring up the issue that the resulting figure, 1.7, - is not expectation, but only its estimate, and quite a rough estimate.
Why did I ask about MO? I just wanted to estimate the result. Due to my ignorance I do not know any other estimation methods.
You wrote that I have a pretty rough estimate. Can you tell me how I could estimate the result more correctly.
Regards
When we do an action, we always get a result and then we evaluate it (bad, good, so-so, etc.) It is possible to evaluate the result if there are evaluation criteria. Let's say I do 10 pull-ups. Is it good or bad? We compare my result with other "pull-ups" and get the answer. And that's it? It's stupid to compare the result of 10 pull-ups for an 18 year old and a 90 year old. It's just as stupid for a 50 kg man to compare a 110 kg man. That's why there are age, weight and other categories in sports.
How do you evaluate a 50p result, is it good or bad?
Let's say the first criterion is time. One thing is when you get 50k during three days, another thing is when you do it during a year.
The second criterion. 50 points can be obtained both when 5% of the deposit is used in a deal and when 70% of it is used, or it cannot be obtained in both cases. Let's put aside the lot size.
Then we may have different ratio of SL to TP.
The ratio of profitable trades to negative ones may be different. Suppose the same 50 points on 30 trades can be obtained both with excess of positive trades over negative ones, and vice versa. Will such inequality SL>TP=TP>SL be true, if in any case we can gain 50 points. It is evident that everyone will say it is better when TP>SL, but why? After all, a trader's goal is not to outperform profitable trades over unprofitable ones, his goal is capital growth.
Mathemat wrote that "the winner of ATS-2007, Better has had about 400% cushion". As far as I know the championship lasts several months. It's likely that this "cushion" will turn into -400% in, say, a year. Can we make an assumption from this that a smaller "cushion" might be suitable for a longer testing period? Agree that a "cushion" of 400% in 3 months is not the same as 400% in a year.
Most likely there are other criteria that can suggest the viability of a particular trading method in the future
Are there broader methods of evaluating results than MO, the "cushion"?
Why did I ask about ME, I just wanted to assess the result. Due to my ignorance I don't know any other estimation methods.
You wrote that I have a rather rough estimate. Can you tell me how I could estimate the result more correctly?
Respectfully.
In short, if you get a 5 point IO on the result of 300 trades - it's a very good result.
If you even get 2 points, that's good.
Most have it below 0 at all.