Meander System, V.1.0
The meander system also did best with stops and exits based on the true-range
concept. The first of the two versions operates with a stop loss of 1.8 ATR, a prof-
it target of 3 ATR, and a maximum trade length of nine days. Figures 20.13 to
20.15 illustrate how these numbers where derived.Stop-loss Version
From Figure 20.13 we can see that to get as many profitable trades as possible, the
profit target should be as close to the entry as possible. But even with a profit tar-
get as far away from the entry as 4.5 ATR, the number of profitable trades still
exceeds 50 percent, as long as the stop loss is sufficiently far away from the entry
as well. However, what is alarming in Figure 20.13, which also finds confirmation
in Figure 20.14, is that the stop loss probably needs to be further away from the
entry than the 2 ATR that we’ve decided to be the maximum. We really should re-CHAPTER 20 Adding Exits 237
FIGURE 20.13
Profit target versus number of profitable trades.