I have closed out 4 positions today, all winners. I now have just 1 trade still open. I updated my study and also added some new metrics to help analyze my overall performance. The first thing to note is my extremely high profit factor. That is simply due to the fact that I have only taken a single loss of 0.3x, and the rest are winners. The next thing to note is that my winners are achieving an average RR of 1.4x. My average loss, which right now is just a single loss, is -0.3x. My win rate stands at 90%. Another thing to note is my profit curves ultra high R^2. That means that up to this point my profit curve is very linear without a lot of random variance. For someone not trading with milk money, this is important to me.
What does all of this mean? For starters I will state the obvious which is that one only needs a 1:1 RR with a 50% win rate to break even. Nobody wants to do all of this work to simply break even, but even that is a better outcome than most traders will ever achieve. With my 1.2 RR and 90% win rate, if I maintain anything even remotely close to that in the long run, I should see long term profits. The next point I want to make is that it would now take 12 consecutive losses at maximum loss for me to just break even. I hope I don’t see that, but since 2013, I have certainly had half-a-dozen or so loss streaks before, so I am never going to discount the possibility.
Realistically speaking, I am going to start accruing more losses over time and expect some of these numbers to worsen. My long term goals are a PF above 3, r^2 above 0.8, win rate above 50%, and positive RR above 2. I am exceeding everywhere except in the positive RR category. While I can only take what the market gives me, I do know there have been a number of occasions over these 10 trades where I entered prematurely and exited prematurely. I would likely have a RR above 2 if I would have been more strict on my entries and exits. I have been working on my mechanics and rule set to hopefully improve this numbers. This candlestick study is also there to help me figure out the best mechanics for my trading style.
I would also like to run these metrics on each 10 trade chunk. So at 100 trades I would have 10 groups of trades, each with their own metrics. The goal there would be to see how things of progressing/regressing over time.