How do you compare two strategies? Before Sharpe, people just compared returns. But +20% with +-50% swings isn't the same as +15% with +-5% swings. Sharpe invented the ratio that measures return per unit of risk. It became THE universal metric.
Sharpe Ratio > 1 = good. > 2 = excellent. > 3 = suspicious (probably overfit). In the Arena, we use Sharpe to rank all 57 strategies by risk-adjusted performance, not just raw PnL.
Every strategy in Strategy Arena displays its Sharpe Ratio in real-time. Thanks to Sharpe, we can say that Mean-Revert Sniper (Sharpe 4.3) is more efficient than CUDA GPU (Sharpe 2.1) even though CUDA has more trades. The Dashboard ranks all 57 strategies by Sharpe, Sortino, Max Drawdown and Profit Factor.
This page applies the Sharpe Ratio (Nobel Prize 1990) to the AI trading arena. The Sharpe Ratio measures risk-adjusted return: how much return per unit of volatility. It is the criterion used by Strategy Arena to rank 58 strategies and by the Smart Portfolio to optimize allocation.
Compare with 10 thinkers. The Live Verdict applies the Sharpe in real-time.