Saleability (also called profitability) is a
technical analysis
In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the sam ...
term used to compare performances of different
trading system
Algorithmic trading is a method of executing orders using automated pre-programmed trading instructions accounting for variables such as time, price, and volume. This type of trading attempts to leverage the speed and computational resources of ...
s or different
investment
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing i ...
s within one system. Note, it is not simply another word for
profit
Profit may refer to:
Business and law
* Profit (accounting), the difference between the purchase price and the costs of bringing to market
* Profit (economics), normal profit and economic profit
* Profit (real property), a nonpossessory intere ...
. There are varying definitions for it, some as simple as the expected or average
ratio
In mathematics, a ratio shows how many times one number contains another. For example, if there are eight oranges and six lemons in a bowl of fruit, then the ratio of oranges to lemons is eight to six (that is, 8:6, which is equivalent to the ...
of
revenue
In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business.
Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...
to cost for a particular investment or trading system or "ratio of the number of winning trades or investments to the total number of trades or investments made, a number ranging from zero to 1." Others can be complex or counter-intuitive.
:Saleability = nProfits/nTrades - 1/(1+aveProfit/aveLoss)
[definition was published in the journal ''Technical Analysis of Stocks & Commodities Magazine'':ibid]
This is computed for each system or investment being compared over the same period long enough to include significant "ups" and "downs". A suitable period is something like the last 5 to 20 years.
References
Technical analysis
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