nicely. Starting with Figure 20.16, we can see that a profit target 2 ATRs away
from the entry price produces the highest profits, together with a trailing stop
between 2.4 and 2.7 ATRs.
With this information at hand, we move to Figure 20.17, which shows that a
profit target of 2 ATRs also should work well with a trade length ranging from four
to nine days. (We’re trying to avoid the three- and ten-day setting at the beginning
and end of the range.) In both cases, the average profit comes out to approximate-
ly 0.35 percent per trade. So now we know that a profit target of 2 ATRs works
well with several different settings for both the trailing stop and the maximum
allowed trade length. It remains to be seen if we can make the maximum trade
length work equally as well with any of the trailing stop lengths suggested by
Figure 20.16.
And what do you know? Looking at Figure 20.18, we see that a maximum
trade length of six days should work well with both a trailing stop of 2.4 ATR andCHAPTER 20 Adding Exits 243
FIGURE 20.16
Profit target using trailing stop 1.