TRADING GLOSSARY
Sortino ratio
The Sortino ratio measures return above a chosen target relative to downside deviation, which captures returns falling below that target. Unlike the Sharpe ratio, it does not penalise upward fluctuations; results depend on the target and calculation convention used.
EXAMPLE
Using hypothetical annualised figures, a 10% return, 2% target and 8% downside deviation produce a Sortino ratio of (10% − 2%) ÷ 8% = 1.
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Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Glossary definitions are general education only and are not investment advice. Risk disclosure