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Letting Winners Run with Algo

When I place my trade I always place an Stop Loss and Exit at 1:2 risk/reward ratio. I cannot find a good way to determine if I should let my winner run and move out my Exit. Any recommendations?

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You could try backtesting with a trailing stop loss and see if the performance of the algo improves.

You could also make the algo more complex by having a fixed stop loss by default, but a trailing stop loss when certain criteria are met. This will give it more flexibility to only let your winners run when the signal from your model is stronger.

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Another method is to take partial profits using multiple targets and if possible get to the point of a risk-free position and then let it run with a wider trailing stop, which may be based on volatility.

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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


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