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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How to determine if winners should run and move out exit in algo trading with stop loss and 1:2 risk/reward ratio?
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Letting Winners Run with Algo
Dmitriy | December 2018
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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Yujun Tang
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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Ernest Shaggleford
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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