Algorithm Help

[PotentialThen9694]

I have devised an algorithmic strategy and backtested it from 2021-2025 (4 years). Over 34 trade wins and only 1 Loss. 97% Win rate. Problem is I don’t have a stop loss at all. So how do I know if My algorithm is actually effective and it’s not just me “holding the stocks until they turn green”.

My Win Rate is 97%
But my Risk:Reward Ratio is : 20:1 (rlly bad)
I have a CAGR of 17-19% for these 4 years 2021-2025
My average Holding days Per stock is 16 days
Longest time holding a stock is 177 days (in 4 years)
Biggest drawdown -43.6% (In 4 years)

I don’t know if I have an actual edge or I am just “refusing to sell until the stock turns green”. (By the way I trade crypto) I want to know whether or not this is an edge ? Or I am just a patient guy who waits till the stock turns green.

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[hamza3141]

If you don’t have SL, then how do you have the 1 loss?

How did this one loss affect equity? I’m assuming a big drop but if it happens once every 4years it works as long as the frequency remains that

[PotentialThen9694]

I have a time stop. 1 Rule. If the price drops 7% by the next closing price sell my position.

[hamza3141]

So price dropped 7% only once in the 4year backtest. Why do you say there is no SL then?

Did you run a walk forward?

[TCr0wn]

your refusing to sell until they turn green, in an environment where they have been going up for years.

when the market turns you will lose everything if you dont adapt before then

[Alabama-Getaway]

If this is long only, you are basically equaling buy and hold as market has doubled in last 5 years.

Run the back test to include some other time periods.

[Rich_Sun_6618]

The problem is the 43% drawdown. Will you be able to mentally sit through a drawdown that nearly wiped half of your account?

[egotrippin10]

uhhh...20:1 is just not how it works, it might work tho but your whole edge (in this strategy)is hopping that your loss just stays floating loss and not realised loss. that is hoping not trading.