Random Direction Trading with Fixed Stops and Loss-Based Sizing

Summary

This perpetual futures strategy chooses long or short direction randomly, opens a position near the order book, and monitors it for fixed profit or loss thresholds. After a losing trade it increases the next order-size multiplier; after a winning trade it resets that multiplier. It also cancels unfilled orders, checks position state, and reports account equity and position details.

The document provides implementation logic and published settings for a historical backtest, but no performance results or evidence that random direction has an edge. The sizing escalation after losses can compound exposure and drawdowns, while fixed thresholds may not adapt to changing volatility. Execution depends on order-book availability, slippage assumptions, contract handling, and successful order cancellation. The strategy should therefore be read as an example of randomized entries and loss-responsive sizing rather than a validated trading method.

Key ideas

• The strategy selects long or short direction at random for each new position.
• It uses fixed profit and loss price thresholds to trigger exits.
• The order-size multiplier rises after a loss and returns to its initial level after a win.
• The source describes a backtest setup but reports no performance results.

Tags

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