4. Understanding Your Backtest Results

When EdgeLab runs a backtest, the results appear automatically in the right-hand Metrics panel. Here is what each number means and what to look for.

The main metrics

Win Rate The percentage of trades that closed profitably. A win rate above 40% is shown in green; below 40% in red. Note that win rate alone tells you very little — a strategy with a 35% win rate and a 3R average winner can be highly profitable. Always read win rate alongside expectancy.

Expectancy The average result per trade expressed in R (multiples of your risk). An expectancy of +0.25R means that on average, for every $100 you risk, you expect to make $25. Positive expectancy (shown in green) is required for a strategy to be worth deploying. Negative expectancy means the strategy loses money over time regardless of position sizing.

Max Drawdown The largest peak-to-trough loss in the backtest period, expressed as a percentage of the account. This tells you the worst losing streak the strategy experienced historically. A strategy might show strong overall returns but have a drawdown that would be psychologically difficult or account-threatening to sit through.

Total Return The cumulative percentage return over the entire backtest period, assuming consistent position sizing. This is shown for context — it is heavily influenced by position size assumptions and should not be compared across strategies unless the sizing method is identical.

Trades The total number of trades in the backtest. This matters because statistical significance requires a reasonable sample size. EdgeLab will warn you if a backtest has fewer than 30 trades — results with a small sample are unreliable and should not be the basis for a live deployment decision.

Sharpe Ratio A measure of risk-adjusted return. A Sharpe above 1.0 is solid; above 1.5 is strong; above 2.0 is exceptional. A Sharpe below 0 means the strategy loses money. Note that Sharpe can be inflated by strategies with very short holding periods — always read it alongside the equity curve.

Secondary metrics

Beneath the main grid you will find additional detail:

• Profit Factor — Total gross profit divided by total gross loss. Above 1.0 means profitable; above 1.5 is generally good.
• Avg Win / Avg Loss — Expressed in R, these show your reward-to-risk ratio in practice. If your average win is 1.2R and average loss is 1.0R, your strategy has a natural edge from the ratio alone.
• Spread Applied — The spread cost in pips that was deducted from each trade during the backtest. This makes results more realistic.
• Outcome Breakdown — If available, a count of how trades exited (TP hit, SL hit, time exit, etc.)

The robustness bar

Below the metrics you will see a robustness score expressed as a percentage with a colored bar:

• Green (60%+) — The strategy held up well across a range of parameter variations. This is a good sign.
• Amber (40–60%) — Moderate robustness. The strategy works but may be sensitive to the exact settings chosen.
• Red (below 40%) — The strategy is likely curve-fitted to the specific parameters tested. Treat results with caution and do not deploy without further testing.

The Download PDF Report button

After a backtest runs, you can download a full PDF report of the results by clicking the button in the Metrics panel. This is useful for saving a record of a research session or sharing results.

Updated on: 24/04/2026