The ISP optimization criterion is an important indicator that allows you to more accurately assess the effectiveness of a trading strategy. Unlike the recovery factor and IMP, which focus only on the strength of the drawdown, ISP also takes into account its duration. This makes ISP a more comprehensive and informative indicator.
The duration of the drawdown is of great importance for traders, as long periods of losses can have a very negative effect on psychological state and discipline. In addition, prolonged drawdowns can lead to negative synergies with other systems and factors on the trading account.
The ISP uses a correction factor that adjusts the recovery factor depending on the duration of the drawdown. This allows you to get a more realistic picture of income stability and helps traders choose strategies based on their personal preferences to expect a new maximum on their account balance.
Using an ISP in the analysis of trading strategies and indicators can help identify weaknesses and improve overall trading efficiency. For example, strategies with a high ISP are generally considered more stable, reliable, and have the property of better handling new data outside the optimization area, which makes them preferable for long-term investments. And of course, the balance charts with high IMP are very beautiful and smooth.