---
title: "Sharpe ratio - Meaning & GFN's Figure - Get Funded Now"
description: "Return above a benchmark cash rate, divided by the volatility of those returns. It measures how much variability was accepted per unit of return, so a…"
url: "https://getfundednow.com/glossary/sharpe-ratio"
language: "en"
last_modified: "2026-09-22"
publisher: "Get Funded Now (getfundednow.com)"
translations:
  es: "https://getfundednow.com/es/glossary/sharpe-ratio"
  pt-BR: "https://getfundednow.com/pt-br/glossary/sharpe-ratio"
  fr: "https://getfundednow.com/fr/glossary/sharpe-ratio"
  it: "https://getfundednow.com/it/glossary/sharpe-ratio"
  de: "https://getfundednow.com/de/glossary/sharpe-ratio"
disclosure: "All trading at Get Funded Now is simulated. 'Funded' means a simulated or virtual account; GFN is not a broker and does not hold client funds."
---

Strategy and performance

# Sharpe ratio

Return above a benchmark cash rate, divided by the volatility of those returns. It measures how much variability was accepted per unit of return, so a smoother equity curve scores higher.

GFN’s figure

A smoother return profile survives GFN's limits better in both directions - the 5% daily loss limit on the 1 Step and 2 Step and the 3% limit on Instant test day-to-day variability directly.

In detail

## Sharpe ratio, explained

Sharpe penalises volatility in both directions, which means an unusually good month lowers the ratio in the same way an unusually bad one does. That is its main criticism.

For a prop account the useful reading is indirect: a high Sharpe usually means a shallow peak-to-trough drawdown, which is what a fixed floor is actually testing.

[Rules handbook](https://getfundednow.com/rules) · [More strategy and performance](https://getfundednow.com/glossary/category/strategy)

Related

## Terms that come with it

Most rules only make sense next to the ones they interact with. These are the entries this one depends on.

- [Sortino ratio](https://getfundednow.com/glossary/sortino-ratio) - A variant of the Sharpe ratio that counts only downside volatility. Large gains no longer lower the score, so it measures the variability a trader actually minds rather than all of it.
- [Profit factor](https://getfundednow.com/glossary/profit-factor) - Gross profit divided by gross loss across a sample of trades. A profit factor above 1 means the strategy made money; below 1 means it lost, whatever the win rate suggests.
- [Equity curve](https://getfundednow.com/glossary/equity-curve) - A chart of account equity over time. Its slope shows the rate of return, its smoothness shows consistency, and its deepest dip is the peak-to-trough drawdown a risk limit would have had to absorb.
- [Peak-to-trough](https://getfundednow.com/glossary/peak-to-trough) - The decline from an equity curve's highest point to its lowest subsequent point before a new high is made. It is the standard way of stating how deep a strategy's worst historical losing run was.
- [Expectancy](https://getfundednow.com/glossary/expectancy) - The average result of a trade over a large sample, combining win rate and average win and loss. A positive expectancy is necessary for a strategy to work and not sufficient for it to pass an evaluation.

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Source: https://getfundednow.com/glossary/sharpe-ratio
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