I am backtesting my strategy and have completed 150 trades on the 4-hour chart and 100 trades on the 1-hour chart. I plan to do more backtesting and forward testing, but before I invest more time, I need to ask:
How much should my strategy earn? On the 4-hour chart, I have a 20% increase over 150 trades. Is this enough? Should I look for improvements, or stick with what I have and slowly make money over time?
Thanks in advance!
Not enough information was provided. Are you willing to risk 1% per trade? As a 20% return for a 152% risk is not ideal. However, if you risk 0.1% per transaction, a 20% return for 15.2% risk is not awful.
However, we may look at this from a broader viewpoint, namely that most people lose money. If you are making any money, you are already ahead of the competition. So it is up to you.
I have a fixed take-profit of 5% in place. If it doesn’t work, I’ll average down until I lose confidence in it or until I reach my daily or trade-specific maximum stop-loss. That being said, I scalp with smaller transactions and a high win rate, so depending on my beginning contract size (1–5), 5 percent may make anywhere from $5 to $25.
I appreciate that, my friend. Though this puts into perspective where I was aiming and where I should be aiming, I wouldn’t consider myself a scalper by any means.
My projected value is 34%, however, that is assuming a stop loss of -20%, which is increased to 10% if the price surpasses 20%. This is for each trade; I only use 5% of my account for trading. Therefore, I would frequently close the 0DE/1DE contracts for +10%.