Bala, PA, USA
Experience: Intermediate
Platform: NinjaTrader
Broker: Mirus, IB
Trading: SPY, Oil, Euro
Posts: 1,854 since Jul 2010
Thanks Given: 300
Thanks Received: 3,373
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It depends of various factors. You would have to determine the stats for how often you get series of winners and series of losers, and how long those strings are on average. Generally though, I believe if you are going to trade a system mechanically like that, you have to take every signal, because you will generally never know which next trade will be a loser or a winner, and the moment you start cherry picking, you invalidate the stats that you derived.
Also depends on the characteristics of the system. For a trending system that generally averages 4 trades per day, then with the stats you mentioned, then I would consider stop trading if I get 3 trades in a row. But if that system generally produces 20 trades per day, then I would not stop after 3 winning trades.
I think the proper way to handle a system with the characteristics you mentioned, is to try to improve it with money alternative management techniques.
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