I want to calculate my Risk-Reward-Ratio to pipe it into an equity simulator.
The risk is calculated by dividing the reward by the risk. I also need the number of iterations and the hit rate to get the results.
For example:
I made 4 trades with the result of 2,1,3,-1.
The hit rate would be 75% and the RRR 2:1 (mean winners/mean losers). Number of iterations is 4.
If I pipe this into an equity simulator I get the right result of 5.
However, if I made 4 trades with the result of -3,3,10,-2 it is not working.
The hit rate would be 50% and the RRR 2.6:1 (6.5/2.5). The number of iterations is 4.
If I pipe this into an equity simulator I get a wrong result of 4. The result must be 8.
Any idea what is wrong? Looking at the results I would argue the RRR of the second scenario is too low.