Profit targets vs trailing SL .

attila low

Active member
152 4
What do you use ?, i prefer to let my winners run but i am very new and still developing my strategy .
 

tomorton

Legendary member
8,137 1,225
Its a decision that is very dependent on your strategy, you can only really learn whether it will work or not by back-testing and trialling it. A small change in profit-taking rules like this can have an enormous impact on the your net profits per year.
 

attila low

Active member
152 4
Its a decision that is very dependent on your strategy, you can only really learn whether it will work or not by back-testing and trialling it. A small change in profit-taking rules like this can have an enormous impact on the your net profits per year.
is there a statistical way to find out which is better in the long run( better edge ) ?
 

tomorton

Legendary member
8,137 1,225
No, you can only measure what has worked in the past and how well it has worked. If it has worked better than any other tactic, keep using it, but of course changing market conditions could still affect the outcome differently in the future.
 

attila low

Active member
152 4
No, you can only measure what has worked in the past and how well it has worked. If it has worked better than any other tactic, keep using it, but of course changing market conditions could still affect the outcome differently in the future.
BTW is there a site that publishes back test results of various strategies ?
 

tomorton

Legendary member
8,137 1,225
Not reliably, but I would not take it literally anyway. Strategies are built from guiding principles and then finished with detailed tactics and rules. A guiding principle might be look for a long entry when prices are rising. Or do not hold open positions over the weekend. But not every strategy that uses these principles will be profitable.

Grab a simple objective strategy and demo trade it until you understand why it works, until you understand how it could be better (for you) and very importantly until you understand how to test a strategy.
 

FXX

Experienced member
1,210 230
I don't use either. trailing stops end up losing profit and static targets can result in losing or break even trades. I base my targets off market feedback. When price moves it is due to sentiment which is affected by news feeding into the market. If there is a major upcoming risk event, sentiment will be short lived as the market awaits the news. My approach is simple, price will push into levels and if those levels hold then there is a greater chance of being stopped out as the market attempts and fails to break. The longer price sits there the less likely it will break and there is a greater chance of price going against the trade.

static targets assume price will be successful, and it rarely is in the short term. trailing stops always have to give room and end up giving back profit which is unnecessary. you could use a trailing stop as a backup to a dynamic approach based on market feedback.
 
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attila low

Active member
152 4
I don't use either. trailing stops end up losing profit and static targets can result in losing or break even trades. I base my targets off market feedback. When price moves it is due to sentiment which is affected by news feeding into the market. If there is a major upcoming risk event, sentiment will be short lived as the market awaits the news. My approach is simple, price will push into levels and if those levels hold then there is a greater chance of being stopped out as the market attempts and fails to break. The longer price sits there the less likely it will break and there is a greater chance of price going against the trade.

static targets assume price will be successful, and it rarely is in the short term. trailing stops always have to give room and end up giving back profit which is unnecessary. you could use a trailing stop as a backup to a dynamic approach based on market feedback.
is it same for stocks ?
 

NVP

Legendary member
37,535 1,988
both
 
 
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