FEB NDX Fast Butterfly Day-by-day review (4 trades)
So, let me start with a log of all trades (Live and backtested) for this strategy, I’ve tested the NDX Fast Butterfly for a little over one year before I started trading live, here is my log:
This is fine, but let’s also look at a simulated equity curve chart based on this data:
You’ll notice in the above picture that despite the ups and downs, categorized by a relatively smaller win-ratio (60%), the strategy makes money over time because its good win-loss ratio. Therefore, moving forward it is imperative to control the win-ratio and do not let it run out of hand.
I’ve decided to go back to the most basic factors when determining if you have a positive edge: Win-loss ratio and percent wins. With these two numbers, and the average win, you can use a very nice tool that Henry Carstens put together to test your edge, go to http://www.verticalsolutions.com/tools/pl_forecaster_pctwins.html and check it out for yourself, just plug in the variables and run a few scenarios to make sure your position is still a winner.
I hope you enjoy this new approach at looking at your trades from a different angle.
Cheers!
Gustavo
