StockFetcher Forums · General Discussion · Trailing Stop Losses<< >>Post Follow-up
snappyfrog
490 posts
msg #158375
Ignore snappyfrog
modified
1/10/2022 6:51:15 AM

I am a huge fan of using trailing stop losses. This helps
take some of the emotion away when trying to find a
good exit strategy. My go to amount has always been
in the 5% to 10% range depending on the stock.

I came across this site that says they have done backtesting
and 15% comes out as the winner. Have any of you done
any backtesting and / or have found this to be true?

https://www.quant-investing.com/blog/truths-about-stop-losses-that-nobody-wants-to-believe?fbclid=IwAR1TtrpkYt_d-nirG-NysK4uM4ZfBMrYxaKGUlQnHzB_pL_7G0ELxQUvTdk



xarlor
468 posts
msg #158376
Ignore xarlor
1/10/2022 8:46:52 AM

Great read! Thanks for bringing it to our attention.

I haven't done any backtesting per-se, but my own experience is in line with their conclusion: trailing stops produce better returns. Their research was on the OMX Stockholm 30 index, which is basically Sweden's version of the DOW. When trading indexes or large-cap stocks, this research holds.

However, if you apply it to volatile or small stocks (under $5), you may find a 15% trailing stop is too tight. You'll get dumped out of a nice run often. Again, I have no backtesting to prove it, but subjectively, I've found better success in the 20% - 25% trailing stops when playing runs on lower-priced stocks.

StockFetcher Forums · General Discussion · Trailing Stop Losses<< >>Post Follow-up

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