it for all trades comes out to 2.94, which is considerably less than the 3.31 units
from Figure 17.2, which made it so easy to believe.
But that isn’t enough. Plenty of other things are wrong here that we still need
to address. Let’s take a close look at Figure 17.3 and try to figure out what we need
to address next.
Can you see it? What is wrong is that Figures 17.2 and 17.3 look exactly the
same with the exception of the leftmost column. This would not be the case in real-
life trading. Instead, several of the trades that ended up as winners in the system
without a stop loss, would end up as losers. In the system without the stop loss, all
trades could fluctuate as they wanted until they got stopped out for reasons other
than having reached a certain maximum allowed loss. Several of those winning
trades would also have fluctuated, one or several times, around the stop-loss level,
which wasn’t in effect. But with the stop loss in effect, a trade can only touch this
level once and it is stopped out. There would be no second chance for that partic-
ular trade to prove itself and turn a profit. Instead, once the stop is hit, that trade
is out with a loss, and it is moved from its column in Figure 17.1 to the maximum
loss column in Figures 17.2 and 17.3.CHAPTER 17 Distribution of Trades 195
FIGURE 17.3
Adding in the largest losing trades.