Is a higher Sortino ratio always better?
Generally yes—a higher Sortino ratio means more return per unit of downside risk. However, an extremely high ratio (e.g., 5.0) might reflect a very small sample size, a lucky streak, or overfitting to past data. Look at both the Sortino ratio and the actual losses and win rate behind it.
How is Sortino ratio different from Sharpe ratio?
Sharpe ratio divides average return by total volatility (up and down). Sortino ratio divides average return by downside volatility only. Because Sortino ignores upside swings, it often shows a more flattering picture of a strategy if you care only about losses. Choose Sortino if downside risk is your main concern; Sharpe if you want to account for all swings equally.
What target return should I use for Sortino ratio?
Most traders use 0% (break-even) or the risk-free rate (e.g., current Treasury yield). Some set it to their minimum acceptable return. The choice changes the ratio—a higher target makes downside deviation larger and the ratio smaller. Stick with one definition consistently so you can track trends in your own performance.
Can I use Sortino ratio if I have very few trades?
Technically yes, but the ratio becomes unreliable. With only 5–10 trades, one big loss or a lucky winning streak can swing the number wildly. Aim for at least 20–30 trades before the ratio starts to be meaningful. Mantis stores all your trade data locally, so you can review it as your sample grows.
Does a high Sortino ratio mean I will keep earning money?
No. Sortino ratio summarizes *past* performance. Markets change, your edge may fade, and new conditions can break patterns you relied on. A good historical Sortino ratio is a sign of disciplined risk management, but it does not promise future results.
