• exactly.
    without this measurement, someone who use a reckless high variance trading would be the winner.
  • At somewhat level I like this Sharpe ratio system but I want to ask you This challenge will be in over real live trading account right ? If yes than this type of restriction should not be there. I have 20% draw down and return is around 900% so is it risky for challenge?
  • Yes, the challenge is on a real live trading account. The modified Sharpe ratio system does not restrict you in your trading behaviour, you can still do with your money what you deem best. What it does is ensure that if two traders have the same return, the one whose trades were less risky will win. If you have a return of 900% and had 20% drawdown on the way to the 900% return, you have a very good chance of winning.
  • Ok thanks Than I will stick to my strategy in challenge and is it compulsory that verification is required of over account to take part?
  • Excellent, trading your own strategy is also important, because to win and keep the first prize, you need to trade with the same strategy during the competition and once you have the $100,000 as well be trading with the same strategy.

    Regarding the account validation/verification: Once your account is a live account you must validate it within two weeks, otherwise you cannot trade anymore. That means that you can start the competition even with an unverified account, but need to verify it during the challenge. >>More information about account verification
  • Ok Thanks for the information I started verification process I hope it complete fast.
  • Sounds very good, all the best! Here the two mistakes people usually make:

    1. Always also check your spam folder for replies from Varengold and add @varengold.de to your safe sender list.
    2. You need to have your identity verified by your bank or a notary and then really send the documents also physically to Varengold, not only by email.
  • starting balance A $...at the end of month it is 38 x A $ ... worst scenario is that drawdown can be 10% of curent balance (not initial A investment).... there are three trades per day (non less than 1:100 lever aged).... at the end of month some profit wd etc..and desision what will be starting A$ for next month.... how Modified Sharpe ratio calculate all I have wrote? I try to figure out but can not.
  • A few remarks to that:
    1. If you would like to participate in the challenge, it is important not to withdraw during the challenge. You can do it, however you will be disqualified.

    2. There are two sides to the modified Sharpe ratio equation:
    a. the return
    b. the risk component, i.e. VaR

    How much you leverage your trade can affect a and b. Why is that? First, leverage has an impact on your return, because if the trade goes well, you will have a higher return and if it goes badly, you will have a lower return. Second, leverage affects the risk component, because it increases the absolute amount of risk you are taking.
    So the more leverage you use, the higher your return needs to be to compensate for the increased risk you are taking. Hence, if you have a bad return despite (or sometimes proably because of) using a lot of leverage, you are double punished.

    However, if you really achieve 38 x A $, the worst scenario being a drawdown of 10% of the current balance, the modified Sharpe ratio will be excellent.

    If there are open questions about this, we can also discuss them in tonight's webinar coaching for the $100,000 tradimo trading challenge.

    All the best,
    Sebastian
  • Thank You very much Sebastian. I am not interesting in this moment to participate in Chalenge. But Your article are very interesting. Year ago when I had won some Dukascopy trading contest some funds and private investitors flooding my inbox with wondering about my statistic and some talks about things you have pointed in this article. That was mystery for me then but after this text about Sharp ratio I finaly have a clue why they was so interested and wondered.
  • Really cool, I'm glad we could help you understand it better. Thank you very much for your feedback.
  • You are welcome. Very nice site at all not just ths aricle. Great "MUST visit" place for all type of traders beginers as well as expirienced. I am waitng this VarenGold 100fre bonus to try them (conditions, ecxecution, company attitude etc)... will see around in a future wink

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