A measure of risk-adjusted returns. Higher Sharpe ratio = better return per unit of risk. Calculated as (average return - risk-free rate) / standard deviation of returns. Prop firms increasingly look
A measure of risk-adjusted returns. Higher Sharpe ratio = better return per unit of risk. Calculated as (average return - risk-free rate) / standard deviation of returns. Prop firms increasingly look at Sharpe ratio during funded account evaluations. A Sharpe ratio above 1.5 indicates strong risk-adjusted performance.