CHAPTER 1

Potential Profit as a Measure of Market Performance

The goal of trading is to make money, and for many, profits are the best way to measure that success. It is one of the most important performance characteristics of trading. In this chapter, I would like to emphasize that in contrast with ordinary profit, potential or maximum profit—the central subject of this book—does not deal at all with the activity of an individual trader. Potential profit and the strategy producing it are market properties. Along with this, I will write a C++ program computing Pardo's potential profit.