Big Stop, Better Profits?

Nov. 24, 2023

This week we’re looking at getting out of slumps via a high win rate, and it’s hypothetically worked well on our Hornet portfolio.

As you know, a high-percentage methodology needs a big stoploss, one that’s much bigger than the profit target.

We can’t have a high win rate and a positive reward-to-risk ratio. It’s not mathematically possible over the long-term.

If you see a system online claiming a high win rate and a good reward-to-risk, be afraid.

Be very afraid. 

So far, we’ve seen two examples of the Hornet portfolio, one with a 100-pip stop and one with a 50-pip stop.

The 50-pip stop did better.

In today’s example, I’m cranking the stoploss up to 150 pips, which seems stupid.

For one, 50 pips did better than 100 pips. Therefore 50 pips will be better than 150.

For another, a full 150-pip stopout would surely ruin the entire portfolio.

It’s basically like having no stoploss at all, which also seems stupid.

Yes, the Hornet robot has a timed exit and maybe that would stop a catastrophe.

But there’s a reason I’ve never tested a 150-pip stop before.

It’s moronic.

Here it is anyway.

As usual, this Hornet portfolio trades 9 pairs using 1 lot each time on a hypothetical $15k account in 2023:

Whoa.

The massive stoploss has produced more hypothetical profit in 2023 and hasn’t gone below the account’s initial balance like the other two did.

Having basically no stop has worked the best in twitchy ’23.

Who knew?

The takeaway this week?

In a twitchy year, having a high win rate system can be beneficial.

And having a high win rate system with an outrageously big stoploss is something worth looking into.

Talk to you soon.

P.S. As you might remember, I’m traveling to Melbourne, Australia to speak at an Algo Trading Conference. We leave today. I was planning on running a Black Friday/Cyber Monday offer on the Hornet portfolio, but I won’t be available on either of those days! So I’m planning on doing a promotion in early December. Stay tuned to the Newsletter for details.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.