test of the trading simulator: using stops or not?

I continue testing the trading simulator with the 1-2 setup using the same data.

The second test consists in setting the stops at 2 ticks from the entry. However, I still use the violation of the 2nd setup bar high or low to abort the setup.

This file has the order data:

orders5m-stop2.csv

This order file has the trade execution data:

execs5m_stop2.csv

This is what happens (click on the chart to see it full-size):



To understand what is going on, bear in mind that the chart shows:

1) the highs and lows of the 5m bars in grey
2) short entries as black dots
3) long entries as blue dots
4) stop executions as red dots
5) entries resulting in a loss as red circles around the corresponding dot
6) green lines connecting entry and exit of a winning trade
7) red lines connecting entry and exit of a losing trade

This run results in a total loss of $254.6 per contract.

Now let's see what happens if I get rid of stops all together. That means that the simulator will always stay in the market and it will simply flip from long to short and to long again as the setups are triggered.

This file has the order data:

orders5m_nostop.csv

This order file has the trade execution data:

execs5m_nostop.csv

Here we have the chart showing the result of this experiment (click it to see it full-size):



In this case we experience a much bigger loss of $683 per contract.

Categories: trading simulator, trading setups, price action