Backtesting with fixed lots vs Risk (variable lots)
risk = (order open price - initial stop loss) * order lots / $10
%risk = account balance * percentage
solved for order lots
WHRoeder:
risk = (order open price - initial stop loss) * order lots / $10
%risk = account balance * percentage
solved for order lots
Sorry, I am not sure what the purpose of this code is in relation to my original post.
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Which do you prefer and why?
For me it really depends on the system. I like to use a fixed risk % where possible as this shows bigger profits because the lots increase as the account grows. However, this is not ideal in some cases where my system opens/closes trades solely on indicators....I may need a wide stop in testing that allows the indicators to close out the trade BEFORE the stop loss (which in this case would interfere with the strategy) but if I use a fixed risk % in this case then the lot size will be small (because of the wider stop loss that allows proper indicator analysis) and a loss (closed out by the indicator) would not be the full stop loss and therefore not the complete risk....However, I always ensure that the wider stop is still suitable for the lot sized used in this case despite the fact that as the account grows the lots could end up being very small for the size of the account.... Thoughts?
I know Ubzen here recommended fixed lots to give a "better idea of how a system would perform" and would like to know why that COULD be case?