The Remek! Interactive Edge Calculator
The edge in trading is the combination of two factors: the accuracy (the percentage of winners among all trades) and the average win-loss ratio over a large number of trades. Enter your data in the yellow fields below to calculate your edge.
(Probability of a win multiplied by the average win + probability of a loss multiplied by the average loss. Note: loss is a negative number.)
Verifying your edge is a complex and ongoing task. For starters, how do you know the above values?
1. You can backtest, as a first step. Backtesting has some inherent shortcomings, compared to real life. Is one backtest run on a given time period enough? Probably not, since markets change.)
2. You can forward-test in SIM. A step better, but this also has some inherent shortcomings, compared to real life. Is one forward-test run on a given time period enough? Probably not, since markets change. Also: sample size matters. A forward-test of 20, 30, 50 trades is probably not enough.
3. Forward-test with real money. The real deal. Even then, each test run will produce different results. Also, you will need to be able to interpret these results.