SQN® by setup - System Quality Number
SQN® stands for System Quality Number®.
The SQN®, therefore, helps to evaluate a trading strategy and compare different strategies based on risk, volatility, and performance metrics.
The higher the SQN®, the better the strategy generally is.
Formula: SQN® = root(number of trades) * (expectancy/stdev(R-multiple))
SQN® scale for interpretation:
<1.5: Probably Very Hard To Trade.
1.51-2.0: Average System (Should Be At Least 1.7).
2.01 to 3.00: Good System.
3.01 to 5.00: Excellent System.
5.01 to 7.00: Super System (Few Exist).
7.01 Or Higher: Holy Grail System.
The SQN® graph lists the different setups of your trades at the x-axis.
Credit: The SQN® metric has been invented by Dr. Van Tharp - click here
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