The profit factor for the system is 1.64. That means the system wins $1.64 for every $1 it loses. It is the 'edge' or 'expectation' for winning expressed at a ratio.

NUMBER OF TRADES

The test data over more than five and a half years of trading generated 4 to 5 trades per year on average.

EXPECTED TOTAL RETURN

Based on the number of trades per year and the profit factor, the total theoretical return per year is between 7 and 8% which fits well the specific 8% the test period produced compared with the 3 to 5% per year that the actual indexes individually produced.

Recall that the actual long-term multidecade total returns from the market are 10%. This system produces roughly double that so you are looking at, say 20% per year (with half the risk-- being invested most of the time in Treasury Bills).

THE EFFECT OF LEVERAGE

'Foolproof Failsafe' started out as a sermon on safety and salvation for prudent trustees and cautious investors. For the unrepentant gamblers in the congregation, here are a few notes of interest about the increasing glory of leverage in applying this system to the market.