Sharpe ratio

The Sharpe ratio divides a strategy's average excess return by the standard deviation of its returns, then annualizes: Sharpe = mean(r − rf) / std(r) × √periods. Crypto strategies are often annualized with 365 periods (daily, including weekends). A higher Sharpe means more return for the same risk — but it is easy to inflate by overfitting, so judge it out-of-sample.