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If you have a fixed SL and TP then yes, you can almost determine your R:R from these figures . . . I say almost because the Spread will potentially have a part to play. It may seem counter intuitive, but the spread will actually make the WR for a "coin toss" higher . . .
Consider a SL of 10 and a TP of 10 and assume a spread of zero, this give a R:R of 10:10 of 1.0 and this gives a "coin toss" WR of 50%
Now consider a SL of 10 and a TP of 10 and assume a spread of 1.0 this changes the SL to 11 and the TP to 9, this give a "coin toss" WR of 55%
Thanks a lot for this useful post. All the difficulty is now to draw the curve for a strategy.
So in facts, the "coin toss" curve must be drawn with the spread actually used, it would be better to have a set of curves with spread as parameters.
No curve . . . just a single point. Strategy WR and Strategy R:R
Here is an example I created a few days ago . . . the points plotted may have moved since I created this chart. I have used the number of losing trades and number of winning trades to establish the WR and average loss and average win to establish the R:R
Your strategy WR and/or R:R would probably change when you modify some parameters (like SL, TP or others).
Thanks a lot for this useful post. All the difficulty is now to draw the curve for a strategy.
I am making a spreadsheet, I will share when Raptor verifies it.
:)
Here is an example I created a few days ago . . . the points plotted may have moved since I created this chart. I have used the number of losing trades and number of winning trades to establish the WR and average loss and average win to establish the R:R
Im not understanding this chart but does it mean my strategy complies? Anyway i guess the best way is to see it live in signal. Dont waste too much time concentrating in formulas a profit is a profit. If someone came and gave you $1 million will you take it or will you start drawing curves to see if it falls on the line. Also a strategy can have 50% win/loss but the TP is higher so although one would say its like a coin toss every winning trade earns more than each losing trade so your theory doesn't apply i dont even know where you got this. Some people just complicate forex for themselves.
Where did I get this ? I got it from thinking . . .
There is no complies or does not comply . . . your EA is quite close to the line, although it is significantly better post October. Does this mean your EA is about as good as a "coin toss" but is having an OK run ? time will tell, but the further from the line the less like a "coin toss" it is likely to be. You seem to missing the important point, a "coin toss" does not have to have a 50% WR