**Account Profit Graph:** The graph shows the total accumulated profit (sum) of all symbols, and it is this combined sum that is the basis of the system performance metrics.

Note that P&L shown here is only the profit or loss resulting from your capital specified, and does NOT include that original capital amount. ie: the performance metrics do not include the effect of compounding returns.

Use the scroll bars at the bottom of the graph to change the date range for the test. When you change the date range, the Profit/Loss amount and Return at the top of the graph, as well as all other performance metrics, and annual performance metrics will change to reflect the new date period.

**Symbol Selector:** Include or exclude specific symbols in the test.

**Profit:** This is the total profit or loss for the period.

**Gain/Pain:** This is the maximum profit divided by the maximum drawdown generated over the entire testing period . This is our favorite method of quantifying a system's performance, as the amount of profit that a system generates is less important than how much risk is assumed in order to generate that profit. Generally, the higher this Gain/Pain percentage, the BETTER the system performance is. This measures the number of dollars earned (maximum profit) for each dollar lost (maximum drawdown).

**Ave Annual Return:** Average annual return is the total profit over the period of the back test divided by the number of years in the back test shown as a percentage of the original invested capital amount. Note that AlgoLab return calculations are not compounding. That is, the profit and loss is always withdrawn form the trading system, and not reinvested to increase the amount of invested capital. The amount of invested capital stays the same as the amount that you entered into the capital field all through the period of the back test. Compounding returns can have a positive effect on returns, but we chose to be conservative.

**Ave Annual Drawdown:** Average annual draw down percentage. This is the average of each years maximum drawdown shown as a percentage of the original starting capital.

**Maximum Drawdown:** This is the largest drawdown that the system recorded over the period of the backtest. A drawdown is a loss as measure from peak equity to the bottom of the trough before profits resumed accumulating. If you earned $1000 of profit in month 1, then lost $200 in month 2, then earned $2000 in month 3, your account value at the end would be $2800 and your maximum drawdown would be $200. The danger of maximum drawdown is if a drawdown occurs immediately after starting trading, then that loss reduces your starting capital. If a drawdown starts after you have earned profit, then the drawdown may be paid for with profits earned.

**Sterling Ratio:** The Sterling Ratio is the average annual return divided by the average drawdown. The Sterling ratio is an important metric to consider, as it quantifies the average return by how much drawdown can be expected.

**Profit Factor:** The Profit Factor is the ratio of the net profit versus the net loss. This ratio shows by how much the profit exceeded the loss. A value greater than 1 means the strategy has generated more profits than losses.

**Win Rate:** This is the percentage of winning trades. Note that the most profitable trading systems usually have a winning percentage of LESS THAN 50%. The strategies are profitable because the average winning trades are much greater than the average losing trades. A more important metric to consider is percentage of winning month or years, not % winning trades.

**Ave Trade:** This is the average amount of profit or loss per trade.

**No of Trades:** Number of trades over the time period that this system generated.

**Ave Win:** The average profit per winning trade.

**Ave Loss:** The average loss per losing trade.

**Win/Loss:** The average win divided by the average loss. If a system wins only 40% of the time (ie: 40% winning trades), but has an average winning trade that is 2 times the average losing trade, you can see how it can be an overall very profitable system.

**Maximum Profit:** The maximum amount of profit this system generated over the time period.

**Short Profit:** The total amount of profit or loss from only SHORT trades.

**Long Profit:** The total amount of profit or loss from only LONG trades.