Topic: My philosophy in finding good strategies
I'm new here, still learning how to work FSB. Here are some things I've figured out. Please let me know your thoughts and if you have any suggestions or improvements. Thanks
What the Generator curve should look like
The curve should have a nice consistent angle, about 45 degrees. Several jaggy points along the way are preferred. Minimal major swings. Also preferable is that the balance/equity lines are hugging as closely as possible throughout the chart (in-trade drawdowns).
What the OOS portion of the curve should look like
The OOS portion of the plot should be a “contributor” to the overall plot quality. Specifically, the OOS portion should have an excellent consistent path upward, with a strong angle and multiple data points where balance/equity line are hugging.
What qualities should be used to differentiate the Top 10
Account Balance is important, but perhaps not the MOST important. A higher win/loss ratio means less risk in my view, as does a low max drawdown. Reduction of risk and/or preservation of capital is paramount -- more important than Account Balance to me. Ideally I want the best combination of: highest Account Balance, lowest win/loss ratio and prefer higher win/loss ratio.
When should a live tradebot be considered “out of spec” with regard to performance?
If the tradebot should generate an actual drawdown of 25%, it should be stopped immediately and sent back to the drawing board. During testing all strategies are scrapped that hit a 25% or greater drawdown, so this is a minimum expected performance standard. In this scenario, the first 25% account growth would be considered a “breakeven point” for the bot, because in its final life, it would be retired at 25% less than its peak.