The most important reason to use a trading system is to gain a “statistical edge.” This often-used term simply means that you have tested the system, and the profit of the average trade—including all losing and winning trades—is a positive number. This average trade profit is large enough to make this system worth trading—it covers trading costs, slippage, and is, on average, likely to perform better than competing systems. Later in the book, I discuss all of these criteria in greater detail.
The statistical edge is relevant to another statistical quantity called the probability of ruin. The smaller this number, the more likely you are, on paper, to survive and prosper. For example, if you have a probability of ruin less than, say, 1 percent, your risk control measures and other measures of system performance are typically sufficient to prevent instant destruction of your account equity.