Buying Price Drawdowns with Profit Targets and Time-Based Recovery Exits

Summary

This long-only strategy tracks the highest closing price and opens a buy position when the market falls by a configurable percentage from that high. Position size is based on account equity, a capital allocation percentage, and leverage. It closes a position when price reaches a take-profit multiple of the average entry price. A time-based rule changes the exit behavior after a maximum holding period: if the position is still below entry, it can close once the loss recovers to a specified threshold.

The script exposes settings for the drawdown trigger, profit target, holding period, recovery threshold, leverage, and position allocation. It also includes optional monthly performance-table code, but the excerpt provides no strategy results or evaluation. The approach depends on eventual rebounds and can remain exposed during sustained declines; leverage can magnify losses. Repeated entries during a continuing drawdown and the interaction between entry conditions and open positions should also be examined in backtests that account for fees and slippage.

Key ideas

• The strategy buys when the closing price falls a configured percentage below its running high.
• Position size depends on account equity, allocation, and leverage.
• A profit target is set as a multiple of the average entry price.
• After a holding-time threshold, a recovery condition can trigger an exit while the position is below entry.
• The document supplies source logic but no performance results, and sustained declines pose a central risk.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.