A trading strategy can improve its average return while becoming less dependable.
Imagine Strategy A generates:
+2%, +2%, +2%, +2%, +2%
Strategy B generates:
-4%, -3%, +1%, +2%, +14%
Both can produce attractive averages.
But they require completely different risk management.
The second strategy depends heavily on one exceptional outcome compensating for several weak ones.
This is why professional analysis should examine median returns alongside average returns.
For eligible new users, CODE2026 can reduce qualifying Binance Spot trading fees by 20%, lowering one predictable layer of execution costs.
Then compare mean return, median return, return distribution, and how much total P&L comes from extreme observations.
If the average keeps improving while the median deteriorates, the strategy may not be becoming stronger.
It may simply be becoming more dependent on outliers.
Average performance tells you what the strategy produced.
Median performance helps reveal what a typical trade actually experienced.
Never let one extraordinary winner describe an entire trading system.
Imagine Strategy A generates:
+2%, +2%, +2%, +2%, +2%
Strategy B generates:
-4%, -3%, +1%, +2%, +14%
Both can produce attractive averages.
But they require completely different risk management.
The second strategy depends heavily on one exceptional outcome compensating for several weak ones.
This is why professional analysis should examine median returns alongside average returns.
For eligible new users, CODE2026 can reduce qualifying Binance Spot trading fees by 20%, lowering one predictable layer of execution costs.
Then compare mean return, median return, return distribution, and how much total P&L comes from extreme observations.
If the average keeps improving while the median deteriorates, the strategy may not be becoming stronger.
It may simply be becoming more dependent on outliers.
Average performance tells you what the strategy produced.
Median performance helps reveal what a typical trade actually experienced.
Never let one extraordinary winner describe an entire trading system.