Following on from Pippo's post about using Maximum Adverse Excursion then here is the analysis from EURUSD on M30 for 2008.
Red dots are losing trades, blue dots are winners.
The X-Axis shows the maximum profit the trend reached
The Y-Axis shows the maximum loss the trend reached.
The group of red dots along the X-Axis are, I think, the losing trades after we take 1/2 profit and reset the SL. It shows that there is a tendency for these trades to bounce back for a small loss.
There does seem to be a distinct line between the winning trades and the losing ones. This is roughly 60~70 degrees from the horizontal. I now need to decide how I can code this trend line to automatically close a trade if it falls to the left of the line into the red zone. By doing this we will reduce our losses.
I might redraw this graph using % of IB size and see if it's as clear cut.
Red dots are losing trades, blue dots are winners.
The X-Axis shows the maximum profit the trend reached
The Y-Axis shows the maximum loss the trend reached.
The group of red dots along the X-Axis are, I think, the losing trades after we take 1/2 profit and reset the SL. It shows that there is a tendency for these trades to bounce back for a small loss.
There does seem to be a distinct line between the winning trades and the losing ones. This is roughly 60~70 degrees from the horizontal. I now need to decide how I can code this trend line to automatically close a trade if it falls to the left of the line into the red zone. By doing this we will reduce our losses.
I might redraw this graph using % of IB size and see if it's as clear cut.