For these particular charts, all trades were generated using Excel’s random-
number generator, and there is no way to tell exactly which and how many trades
would have been exited above the stop loss, had it not been in place. Therefore, for
demonstration purposes only, I lifted a few trades off the other columns and added
them to the maximum loss column. The result can be seen in Figure 17.4. For good
measure, I also placed one trade to the left of the maximum loss column, as there
always will be a few trades that slip through the safety net (the stop loss), for one
reason or another. With the distribution looking like that in Figure 17.4, the aver-
age profit per trade now comes out to 1.89 units, which is more than 30 percent
less than the original results in Figure 17.1, and more than 40 percent less than in
Figure 17.2, where most other writers and seminar speakers would have left you.
That is, thanks to the stop loss, we are now making less money per trade than we
did originally.
Considering that we are now making less money than originally, if you com-
pare Figures 17.3 and 17.4 would you say that I took away too many profitable
trades and added them to the maximum allowed loss column? Well, I don’t know
what you think, but I believe I most likely didn’t. Specifically, I believe I didn’t
move enough of the largest winners. For a trade to become a large winner, it needs196 PART 3 Stops, Filters, and Exits
FIGURE 17.4
Adding to the maximum loss column.