← Glossary
Sharpe ratio
The Sharpe ratio measures return per unit of volatility rather than return alone, so two strategies with the same total return can have very different Sharpe ratios if one got there with a much bumpier equity curve. It's computed here from per-bar equity-curve returns, annualized assuming roughly 252 trading days a year — like any statistic, it's noisy on a small number of trades.
This explains what sharpe ratio measures. It isn't investment advice — see the disclaimer.