Trailing stops don’t make you any money. – Trading Ideas – May 30, 2024
Customers ask me: “Why does the trailing stop feature turn on so early? After the order is closed with a trailing stop, the price starts moving in the same direction again and reaches the level where TakeProfit was.” To answer this question, I decided to conduct an experiment. For this, I placed the trailing stop parameter on/off in the external settings and looked at the results I got.
When you look at specific transactions, it may seem like you’re not actually making more money by stopping trailing. I have always been suspicious of such statements. And we test everything in our strategy tester to see if it really will be more profitable.
You can download the detailed report at the bottom of this post.
Which profitability chart do you like best? You can see the backtest in the picture. Prop Master Professional Advisor Enable and disable Trailing Stop. I think the difference is obvious.
If you actually consider one trade, it seems like a trailing stop loss only prevents you from taking more profits. However, by considering only one trade, we do not take into account the significant portion of trades that would have made a small profit but would have shown a loss if the trailing stop loss had been lifted.
Therefore, it is always important to verify your assumptions through testing, and we will verify your statements through testing with a large sample of transactions, rather than guessing how things could be better.
