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I might explained it more complicated than it really is and it would probably be easier to understand if I say that accuracy = success-rate.
Example: I got a signal to enter long on usdchf @ .7900. According to the graph in the previous post, it would make sense to only move the position into BE after 60 pips at .7960, since that shows highest profitability. Then there is only two possible outcomes; it either hit my TP based on average range (blue line) or trigger my stop @ .7960.
Hope it was easier to understand.
"We may not be able to control the wind, but we can always adjust our sails"
Can you help answer these questions from other members on NexusFi?
Yes, but the graph was missing important pieces of the puzzle (as far as I could tell anyway), such as stop and target size for each trade, and the MAE and MFE for each trade.
Hi aediaz1,
I have also done extensive testing on BE stops and have found results similar to what you describe. I was surprised that the threshold for moving the stop to BE was so high. It isn't that intuitive at first glance. Mike's question about MAE/MFE is an interesting one. I only looked at those figures in a macro context to give me some parameters for testing. It would be interesting to see what relationship might present itself for a set of test parameters.
I did most of my testing on EUR/USD (6E) and had similar SL/PT ranges. I think my most efficient setting was SL 35ticks and PT 170ticks. It was further optimized with a second, single stop move to 35 ticks when position profit hit somewhere between 80 and 120ticks. (It has been a while since I was working with this trade model and don't remember the specifics.) Of course the entry component of the model has an effect, but that is a whole different conversation
Hi Billr. I had the same feeling when I discovered this research some years ago. Back then I used 20-30 pips trailing stop which was devastating for my results. I think the main reason people want to use such a small trailing stop is to reduce the mental stress. At least, that was probably my reason.
"We may not be able to control the wind, but we can always adjust our sails"