Swing trading for 3-1p/l and 1-1 w/l

Discussion in 'Technical Analysis' started by beachallstar, Aug 11, 2010.

  1. :confused: at 100 stop for 50 target your p/l ratio would be in the negative 2:1,so you would have to win 8 out out of 10 trades,but with a 100 stop for 300 target your break even is at 2.5 trades,and at a 50-50 point or better,you would totally kill!
     
    #11     Aug 12, 2010
  2. bone

    bone

    When you backtest your stop triggers, don't be surprised that having a stop just about as wide as your profit target tests better than the tighter stop. Again, this is with the prototypical swing trading position holding period.
     
    #12     Aug 12, 2010
  3. With 100pip stop 50 pip target you break even with 2 wins out of 3 trades. (100 loser, 50 winner, 50 winner = 2 out of 3)

    with 300pip target 100 pip stop you break even with 1 win out of 4 trades (300 winner 100 loser 100 loser 100 loser = 1 out of 4)

    The win rate is a function of stops. If you look at the win rate alone and say for example 1 out of 4 is easy, you will get killed like 95% get because they do not understand that it is the stops that cause the win rate.

    No more than 5 out of 100 traders understand what I wrote above.
     
    #13     Aug 12, 2010