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JayneshKasliwal

12 تغريدة 18 قراءة May 19, 2023

Lets understand what is Max Drawdown, Expectancy and other Trading Terms !
A Thread🧵

𝗔𝘃𝗲𝗿𝗮𝗴𝗲 𝗣𝗿𝗼𝗳𝗶𝘁 : Avg Profit refers to the average profit per trade in a trading system. It is calculated by taking the total profits from all winning trades and dividing by the total number of winning trades.
My Trading Journal Link : bit.ly
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bit.ly/AdvanceTrading…

Sample Advance Trading Journal.xlsx

Clients Daily PNL Total , Total , Total , Total , Jaynesh , ARUN , Positional , EXPIRY , Name 4 , Na...

𝗔𝘃𝗲𝗿𝗮𝗴𝗲 𝗟𝗼𝘀𝘀 : Avg Loss refers to the average loss per trade in a trading system. It is calculated by taking the total losses from all losing trades and dividing by the total number of losing trades. [3/12]

𝗘𝘅𝗽𝗲𝗰𝘁𝗮𝗻𝗰𝘆 Expectancy is what it sounds like. It helps you understand how winners, losers, gains and losses relate to each other over the long term. This process helps you understand what your trading system profits should be,and helps validate your backtesting
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Lets take example : My 10 Lakh Option Selling System with 320% Returns
𝗘𝘅𝗽𝗲𝗰𝘁𝗮𝗻𝗰𝘆 Formula : (Reward to Risk ratio x win ratio) – Loss ratio = Expectancy Ratio
At this point we can combine these two numbers to create an expectancy ratio (1.61*69)-31 = 0.80
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𝗠𝗮𝘅 𝗗𝗿𝗮𝘄𝗱𝗼𝘄𝗻
🔸 Maximum Drawdown (MDD) is a measure of the largest peak-to-trough decline in a trading system's equity.
It can also be defined as the largest drop in portfolio value from a peak to a subsequent low.
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It is typically expressed as a percentage and is used to measure the risk of a portfolio or trading system. [7/12]

My Ideal Stats for Option Selling System :
🔸 Win rate: 65%+
📷 Risk Reward 1:1.5
🔸 Individual Expectancy > 0.4
🔸 Whole Basket Expectancy > 0.7
📷 Individual Drawdown < 12%
🔸 Basket drawdown < 10%
🔸 DD days = 1-2 months max
📷 Max loss per day : 2%
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Watch the Detailed Video About Trading Terms : youtu.be
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