Comparing Price-Based and RSI-Based Stop-Loss Methods

Summary

The article compares two versions of a one-minute foreign-exchange strategy that use the same trend and MACD entry rules but place stops differently. The shared entries combine 50- and 200-period moving averages with MACD conditions. One version sets a stop beyond the recent high or low across twenty candles, adjusted by ATR, and targets twice the entry-to-stop distance. The other places the stop using an RSI level; both approaches are framed as ways to examine whether an RSI-based stop can reduce stop hunts while remaining profitable.

The author presents backtest summaries for both expert advisors and concludes that the classic price-based stop earned more over the tested period, while also recording more losses. The discussion emphasizes that risk sizing and trade consistency affect the comparison. These results are specific to the reported test and strategy settings: the text offers no evidence that the result generalizes to other markets or periods, and the RSI stop did not maintain consistent risk per trade in the author’s implementation.

Key ideas

• Both tested systems use moving-average trend filters and MACD conditions for entries.
• The classic stop is placed beyond a recent candle extreme with an ATR adjustment and a two-to-one target distance.
• The comparison tests whether an RSI-based stop can reduce exposure to stop hunts.
• In the reported backtest, the classic stop produced more profit and more losses than the RSI version.
• The author notes that RSI-based stops made risk per trade less consistent in this implementation.

Tags

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