Who Is More Profitable?
- Thread starter Arya Stark
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The second one, slower but steadier. I’d rather sleep peacefully with 5% drawdown than stress over big swings even if the returns look flashy.
I think it's #2, because look, s/he has yearly return of 25% (if not compounding) and 22%(if compounding). Either way #2's recovery factor is higher - 5.0 or 4.4.
#1 has 4.0. If #2 traded with the same risk as #1, s/he would make 88% or 100% per year.
The question wasn't about who has a higher recovery factor or who would make more if both risked the same. Of those two example traders, the first one is clearly more profitable. Whether one should choose them over the second one when deciding whom to invest with is a completely different story.
Among serious or professional traders "profitability" almost always means risk-adjusted profitability. Otherwise we'd have to view someone who made 1% per 10 years with dd=90% as a profitable trader.
Profitability is profitability. When you mean risk-adjusted profitability, you have to mention that. Moreso, given different ways it can be calculated.
So you chose to view someone who made 1% per 10 years with dd=90% as a profitable trader. Consensus of professional traders doesn't. Otherwise, the metrics such as PF, RF, Sharpe Ratio or Sortino, would not be the only thing that interests people. No one cares about the absolute profit. Because you always want to know what is your risk taken to get something. You want to know the "price". When you have 1k, you are not ready to make $10 by risking to lose $900, same as you are not going to take a job that requires risking most of your health. That's not profitability, that's stupidity.
Yes, of course.
That's for you to prove.
I'm pretty sure they aren't.
You did - that's what you asked about in this thread's title. Also, a lot of people do.
That 'because' is unwarranted. Yes, you always want to know about the risk. Yet, it doesn't mean that no one cares about the absolute profit.
That's some gratuitous redefinition of terms on your part.
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given time some of your views might change........
using the sharpe ratio as an example...... is it really that important...... if it is to you, what would be a good value....... odds are i know that number......
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let me go way out on a limb here and use enivd as an example......
he has mentioned being a pattern trader on the 240 and up time frames....... we can can guess his sharpe ratio..... without even knowing him....... and i don't.......
now, imagine a 17 year live account with a sharpe ratio of 0.83 ...... can anyone tell me how much i made.....
how about 0.37 ...... or 0.69 ..... or 0.70 ...... i know exactly how much those accounts made this week......
in time it became clear to me you can't eat sharpe ratios.......
only profit.......h
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The main thing is the risk-to-reward ratio, not just the amount of money made. No one will take a big risk for a tiny profit—it’s not worth it.
In my book, CAGR/DD (and RF/Sortino) decide who’s truly better, so I’d favor the steadier 50% in 2y with 5% DD over 80% in 1y with 20% DD
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