The "Monthly Return Index (IMP)" is a criterion developed to assess the profitability of trading systems. In fact, the IMP shows the maximum yield per month, provided that the maximum drawdown does not grow.
This indicator is especially important for traders and investors, as it allows them to assess the potential monthly income, taking into account the risks. When calculating the IMP, the following factors are taken into account: net profit, maximum drawdown of the portfolio, and investment time.
IMP helps you make decisions about: the possibility of scaling trading, the need to adjust risk management, the expediency of making changes to the trading system, and the appropriate size of the trading account. MSI is also very well suited for evaluating the effectiveness of trend indicators.
The advantage of IMP is that it provides a comprehensive view of the effectiveness of the trading system, combining profitability and risk indicators in one value. This allows you to compare different trading strategies with each other and choose the most optimal ones for a specific investment goal.
When using IMP, it is important to remember that this is a calculated indicator, and the real return may vary depending on market conditions and other external factors. Therefore, it is recommended to use IMP in combination with other trading system analysis tools.
IMP is a user criterion for optimizing trading systems.
When used as an optimization criterion, IMP strives not only to maximize profits, but also tries to smooth the balance chart.
IMP is the maximum profit with the minimum variance.