# Annualized standard deviation and Sharpe ratio

Say I have a trading strategy that has given n trades over a period of t trading days. To compute the annual profit I will do something like

CAGR = prod(profits+1)^(1/(t/252))

Then I will subtract the risk-free rate, but how exactly do I get the annualized standard deviation? If I have 30 trades, divided on 400 trading days, could I just calculate the standard deviation of the profits and multiply it by the square root of 252/t?

STDDEV = stedev(profits)*sqrt(252/t)

Or is this logic completely wrong?

• Probably gather the returns on each trading day, then compute standard deviation "in the usual way". – shabbychef Feb 2 at 5:50