Deepstops assist advise
Hello enthusiasts ,
I'm running an automated live system of about ~70–75% win rate, lots of small wins, positive in aggregate, the entries themselves aren't the problem, Im pretty satisfied with the build over all , besides the low end.
So... the losers can run deep before they resolve, and a small number of them never come back and do the most damage. The edge depends on sitting through drawdown, but the occasional non-recovery is brutal.
What I've already tested (so "just use a stop" won't help):
- Hard stop at −20% ROI (on a 10x position): net negative. It cut a huge number of trades that would have recovered — bled more than it saved.
- Drawdown distribution: even among trades that breach −40% ROI, about 53% still return to a small loss or a profit. So any flat "cut at −X%" throws away more eventual winners than catastrophes it prevents.
So a fixed price-based stop is a trap that ive discovered over multiple sesions. The deep drawdowns are mostly noise the rest killers, and by the rest I've narrowed it down to about 4-5%.
The big question how can i mittigate the deep loses? The methodology used:
- Time-based exit (cut if not recovered within N bars) instead of a price stop
- Vol-expansion / regime filter — only bail when the regime that breaks the recovery assumption shows up
- Portfolio-level heat cap instead of per-trade stops
- Size for the drawdown + fractional Kelly, just accept the DD
- A cheap tail hedge / trend overlay
To sum up, I've tried lots of options for the bot itself, and the current conclusion is just not run it 24/7 but in specific times of the day and for a short while.
Any and all suggestions would be greatly appreciated.