#### Adamus

##### Experienced member

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In NinjaTrader, it spits out the Sharpe Ratio for every backtest or optimization run, and so far the value for my strategy are always about 0.10 or below.

Yet NinjaTrader Help says this:

Sharpe Ratio

This statistic returns a ratio that measures the risk premium per unit of risk of your strategy. It can help you make decisions based on the excess risk of your strategies. You may have a high-return strategy, but the high returns may come at a cost of excess risk. The Sharpe ratio will help you determine if it is an appropriate increase in risk for the higher return or not. Generally, a ratio of 1 or greater is good, 2 or greater is very good, and 3 and up is great.

(Profit per Month – risk free Rate of Return) / standard deviation of monthly profits

So by their scale all my backtests so far are absolute rubbish!

Admittedly the best backtest I've got so far has $30K profits and $20K drawdown, so I was expecting poor stats, but this is pretty sad.

Or do I understand it wrong ?