Which system is better?

Which system is better?

  • 60% Win-rate/1:1 RRR

    Votes: 12 54.5%

  • 40% Win-rate/2:1 RRR

    Votes: 10 45.5%
  • Total voters
    22
What ever "system" closely mimics / matches your unique personality

Otherwise you'll be pissin in the wind..., and more importantly fighting yourself


RN
 
cornholio said:
Which system is better, 60%winrate/1:1RRR or 40% Winrate/2:1RRR? They should make the same amount right?;-)
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SAS(A) == 4*(.6/1 - .4/1)*(.6*1 - .4*1)*((.6*1)/(.4*1)) == 0.24

SAS(B) == 4*(.4/1 - .6/2)*(.4*2 - .6*1)*((.4*2)/(.6*1)) == 0.107

The first system is much better.
 
Redneck said:
What ever "system" closely mimics / matches your unique personality
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Good answer Redneck. :)

Some traders like to win often (even if it's only a little) and cannot stand losing 3, 4 or 5 times in a row.

Others like to win big, even if infrequently.

The rational/logical way of course is to trade the system with the maximum positive expectancy, but that's another story...
 
kut2k2 said:
SAS(A) == 4*(.6/1 - .4/1)*(.6*1 - .4*1)*((.6*1)/(.4*1)) == 0.24

SAS(B) == 4*(.4/1 - .6/2)*(.4*2 - .6*1)*((.4*2)/(.6*1)) == 0.107

The first system is much better.
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I have no idea what you just calculated, but my gut tendz to agree. My disc stats looks pretty much like system 1. Even though I hate seeing positions run on without me, the thought of moderate profits turning to a loss has hardwired my brain to not let them get away.

I'm no expert with systems but # 2 appears to have a higher expectancy. Who knows how often each one will take trades, OP didn't specify :confused:
 
kut2k2 said:
SAS(A) == 4*(.6/1 - .4/1)*(.6*1 - .4*1)*((.6*1)/(.4*1)) == 0.24

SAS(B) == 4*(.4/1 - .6/2)*(.4*2 - .6*1)*((.4*2)/(.6*1)) == 0.107

The first system is much better.
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Woah, where did you get this formula and what's it called? I also figured out that the 60% system is better but by doing it the hardway by doing 100 theoretical trades in excel and comparing the results. I was thinking since the calculated "edge" of both systems is the same but the 60% makes more that it has to do something with compounding and the fact that the 60% has more winning trades?
 
Another thing is that I heard that most professional traders would go with the lower win-rate system because it is more "robust". Everything is good in theory, but a real live test would be best.
 
Alternatively, you could run a Monte Carlo analysis in which case you would find the returns are very similar but System B would have a higher drawdown. In my analysis, System A had a Return-DD of 2.38 versus 1.55 for System B. Given almost identical returns, one would chose the system with the lower DD which is System A.
 
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