Risk Simulator

[Caseynotes]

Online risk simulator and projections, you just need to know your average Win, average Loss and your Hit Rate (percentage of winning trades).

http://www.newtraderu.com/2019/05/13/how-to-use-a-risk-simulator-on-your-trading-system/

https://niclashummel.com/risk-simulator

[Guest davidbrister]

isnt that why some systems have the Back testing ability so u can check the risk? 

[Caseynotes]

11 minutes ago, davidbrister said:

isnt that why some systems have the Back testing ability so u can check the risk? 

Risk and profitability, the key to any strategy whether manual or auto is it's profitability over a number of trades rather than snapshots.

You want to know if the strategy has unexpected large drawdown periods that will wipe out weeks of profit, how much needs to be risked on each trade, what is the expected profit factor over many trades.

So all systems need to be back tested and the sim is trying to add forward testing though it's quite basic.

The simplest way of testing the profitability of a strategy is comparing the risk reward ratio to the winrate on a number of trades, in the example below if your reward is 2.5 x the amount risked per trade then your win rate only needs to be 30% for the strategy to be profitable. Any strategy that can plot above the red line is a profitable strategy. You need to know this before taking a strategy (manual or auto) live. You can play the strategy out on demo which is slow, or back test it which is faster, or play it out on a sim which is fastest.

[Guest davidbrister]

thanks