While the Average Trade Profit blends all executions together, looking at the Average Winning Trade and Average Losing Trade in isolation reveals the true internal mechanics and risk management structure of your algorithmic strategy.
To calculate these metrics, the engine splits your execution ledger into two distinct groups:
Average Winning Trade = Gross Profit / Total Number of Winning Trades
Average Losing Trade = Gross Loss / Total Number of Losing Trades
Calculating Your Risk/Reward Ratio
Once you have these two numbers, you can instantly calculate your system’s structural Risk/Reward Ratio by dividing the Average Win by the Average Loss.
| Strategy Archetype | Avg. Win | Avg. Loss | Risk/Reward | Tactical Reality |
|---|
| Trend Following | ₹3,000 | ₹1,000 | 1:3 | Will be highly profitable even with a terrible Win Rate (e.g., 35%). Losses are cut immediately; winners run massively. |
| Mean Reversion | ₹1,000 | ₹1,000 | 1:1 | Requires a Win Rate heavily above 50% just to break even after transaction fees. |
| High-Risk Scalping | ₹500 | ₹2,500 | 5:1 | Highly dangerous. Relies on an extreme Win Rate (90%+). One bad loss wipes out five consecutive wins. |
If your Average Losing Trade is consistently larger than your Average Winning Trade, you must implement stricter stop-loss parameters in the Kalpi Basket Builder to cut your downside risk faster.
