I'd like to thank you both DMB and liftoff for confirming my calculations. It's very important that we have a same view, at least on this basic stuff. Obviously I was wrong for a long time. I even remember saying that Zorro can't be adapted to the standard FXCM demo account, and now suddenly the world is not flat and $50000 matches 100/20 setting pretty nicely. Though I also remember having opened questions at that time that never got answered, no wonder I was lost in the dark for such a long time.

Realization that 'Capital' is actually an estimation of the biggest expected drawdown as per the backtest now opens a whole lot of additional questions. DMB, your calculation with 80% looks mathematicaly OK. But, I wonder can we expect that backtest results will be matched in real trading. Have you ever heard that somebody designed, backtested and then run the system only to find that the results in the live trading were even better? Never happened. wink

What I want to say, and based on my numbers before. M/R 100/20, $50000 starting capital, we backtested and expect 51% annual profit and not more than about 16% drawdown. In reality (read: live trading) we should probably be very happy with 25% after 12 months of trading and if drawdown is not more than say 30%. Does that look reasonable? Reminding once again, with Margin 100 and $50000 of starting capital.

Translating to a more realistic situating but with real money and say $2000 account, to keep the numbers above and if the required capital scales about linearly with the Margin slider, it would mean setting Margin slider at about 4 (=100*2k/50k). Moving it already to just 5 would mean both increased expected profit but also risk of ruin. Am I wrong with any of this?

Finally, we concluded my Z12 demo has aspirations of earning about 50% in a year. As we're about half year through, that translates to about 22% expected in half a year. Versus -7.5% realized. What can we now conclude, is it bad, good, or just ugly (and we have to wait a lot longer to let it reveal it's potential)? After todays conversation, I'm inclined to once again believe that not enough time has passed (yesterday I believed that Z12 plain sucks).

How about another 6 months of Z12 demo, with the current parameters, and than deciding based on the following criteria:

Z12 ends with -> verdict
------------------------
-15% -> plain sucks
-7.5% -> not profitable anymore
~ 0% -> has potential, but not worth it really
+15% -> profitable strategy
+30% -> excellent strategy

Who agrees?