Profitability is the goal we all seek in trading, with the idea that is as stable and durable over time. The basic concept is the ability to generate profit on the investment.
The idea of profitability must be consistent and real, no use having a strategy identified and quantified in demo investment because it can be sobreoptimizada and when carrying actual data fully vary by slippage or sliding market counterparties identified very specific movements of the past that is subsequently very difficult if not impossible to reoccur in the same magnitude, “we will see on these items in more detail.
Markets need to be objectively analyzed, with the criteria that are changing, so it is very difficult that the return obtained by trading systems or trading strategies always win the same, therefore, the ideal is to create a broad portfolio within the potential capital and financial instruments to achieve an overall average according to reality, “can not be a system every month if only gain x percentage of profit” unless we go to coupon bonds fixed income with lower other operating trading “returns.
The difficulty in quantifying the performance of a manual way is to have much time to analyze market movements in relation to our investment strategy, and write down all the patterns and behaviors after identifying the input signal and output market. Currently with technological advances and trading systems programming, we can see if our hand strategy is good in today’s market and as had behaved in other markets, different from the past. This gives us more confidence for any changes that may occur and have largely quantified deviations of losses and yields.
To assess the profitability, we need to value us as investors first, and see what the objective to be achieved, together with the risk you want to assume. In this question all answer you, earn as much as possible with minor losses. But as we all know is a utopia at higher risk, higher returns, and vice versa. The ideal is an intermediate point where the investor feel comfortable and trust the selected strategy to reach its set target, otherwise the slightest change or deviation will be affected psychologically and stop investment.