Anyone have a formula handy that will calculate the number of trades you will need to reach a specific dollar level?
Assuming you know the following:
I usually do this on a speadsheet, but id like a quicker way.
“Average profit per trade” is not a metric which most traders use. It combines several factors (such as win/loss ratio,
average winner, average loser, etc.) which most traders prefer not to blend together.
But, let’s do this using your metric.
You’re asking (if I understand your question) how many trades will it take to get your account from a given initial balance,
to a desired final balance, given that your trades are profitable overall, and the average profit per trade is known.
Let’s define some terms:
iB = your initial account balance
fB = your final account balance
N = the number of trades you make, building your account from iB to fB
p = the average profit per trade
Here’s the equation you’re looking for:
[B]N = [fB - iB] / p[/B]
Example:
You start with $1,000. Your trading system produces an average profit per trade of $13.29. You want to know how many
trades it will take to double your account balance.
N = [2000 - 1000] / 13.29 = 76 trades (at which point your account balance will be $2,010.04)
Clint
p.s. - using your “average profit per trade” metric, [B]margin[/B] does not enter into the calculation.
Thank you Clint for this answer, I think I will use this formula in my EA
I was thinking the formula would be logrithmic. Also, the average profit per trade should be in percent, not dollars. The reason being is that, at least in the model im looking at, the profit is added back into the trading balance.
It would have been helpful if you had mentioned that up front.
Are there any other parameters or conditions that you haven’t mentioned?