Let the profit grow, or limit our profit?

I came across an interesting statistical analysis: taking profit shows a better result than holding a position. Is it so?

Let's check it with a simple example. Let's take ETHUSD as a basis. Open a trade randomly (to select an entry point, use a simple condition: the price is above the average for the day). Accordingly, if it is lower, then we do not open a position. Four sсripts are given below:

  1. Buy – set trail-loss at 1.5% loss, activation when reaching 0.5% profit, in increments of 0.5

    1. Buy – set stop-loss at 1.5%, take-profit at 1.5%
    2. Everything is the same as in point 1, but set take-profit at 1.5%
    3. Same as point 3, but take-profit at 3%
      I suppose experienced traders immediately thought that the best script is the fourth. Let's check if this is so!
      So, after testing all four scripts I got the following results:

Only stop

Take=Stop

Take & Trail-loss

Take=2&Stop

Script 4 won. The logic is simple: the profit is twice the loss, which means that in the same trading scripts, having closed one profitable position, we admit two possible losses.
Of course, testing was carried out on a dozen securities, and the results are similar everywhere, but there are also some of them in which the strategy of "letting the profit grow" works better. But the most important thing is that in almost 100% of cases the worst result is given by the script with equal take-profit and stop-loss!
Send your own scripts, we will test hypotheses at our leisure)

Thanks to everyone who read the article to the end!)

Submitted October 01, 2020 at 10:15AM by Saro_M_V
via https://ift.tt/2SeIb1A

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s