Posted By: Mithrandir77
Doubt about Capital and Required Capital, nothing is enough! - 07/13/15 18:19
I have a doubt about Capital required, in the manual it states in the definition of the Capital variable:
Capital
Initial invested capital in units of the account currency (default = 0 = no initial capital). This has no effect on trading, but on calculating the strategy performance in the simulation. Set this to the initial capital when the strategy reinvests profits; make sure that it exceeds the required capital for avoiding negative equity on the account. Zorro then calculates CAGR instead of AR and determines performance parameters from the invested capital instead of the required capital.
I have trouble understanding what it is underlined. For instance, I have a portfolio trained with WFO and I test without reinvestment and I get that the Capital required is 342$ , here are all the stats:
So, ok, I set Capital to 1000 which is more than 342 and I train factors and test with reinvestment and I get that the capital required is 4119, here are the details
and then if I set Capital to 5000 and test, the capital required increases and so on...
So what is the relationship between Capital and Capital required? In this example, do I need 1000 or 4119 to start running the strategy? I mean, if I try to make sure that the Capital variable is more than the Capital required from the performance report, then when I test it is not enough, how come? Thanks for your help!
Quote:
Capital
Initial invested capital in units of the account currency (default = 0 = no initial capital). This has no effect on trading, but on calculating the strategy performance in the simulation. Set this to the initial capital when the strategy reinvests profits; make sure that it exceeds the required capital for avoiding negative equity on the account. Zorro then calculates CAGR instead of AR and determines performance parameters from the invested capital instead of the required capital.
I have trouble understanding what it is underlined. For instance, I have a portfolio trained with WFO and I test without reinvestment and I get that the Capital required is 342$ , here are all the stats:
Click to reveal..
So, ok, I set Capital to 1000 which is more than 342 and I train factors and test with reinvestment and I get that the capital required is 4119, here are the details
Click to reveal..
and then if I set Capital to 5000 and test, the capital required increases and so on...
So what is the relationship between Capital and Capital required? In this example, do I need 1000 or 4119 to start running the strategy? I mean, if I try to make sure that the Capital variable is more than the Capital required from the performance report, then when I test it is not enough, how come? Thanks for your help!