short period of trades. If the testing period stretches out for several years, you
could also calculate the average return for various time periods, such as years,
months, and quarters.
The value in cell H4 shows the total number of trades taken during the test
period. Note that this number can alter depending on the value in cell C3. The
more we risk per trade, the more we also need to tie up in that trade, and if we tie
up too much, there won’t be any money left for any succeeding trades as long as
the current trades remain open. Thus, the percentage of winning trades in cell H5
can also change because of the same reason.
The value for the maximum drawdown in cell J2 will most likely increase the
higher the value in cell C3. Note, however, that where and when the maximumCHAPTER 26 Dynamic Ratio Money Management 313
FIGURE 26.6
Total number of shares, amount risked, and profits for each trade.