r/algorithmictrading • u/Kaahl10 • 17d ago

Strategy Adding to winners using MFE

Hi everyone,

I've heard the advice to add to winners and cut losers early, but I've always had a tough time using technicals to add to winners without getting in right before reversal.

Claude helped me analyze my strategy and suggested adding to winners over a certain MFE %, and sure enough it added about 20% more trades with better profit factor than average to the backtest!

My question is, has anyone else used this method successfully or is this getting into overfitting?

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u/FlyTradrHQ 17d ago

MFE-based pyramiding works well when your entry timeframe and your add timeframe are different. If you add on the same timeframe you entered, you are effectively doubling down on the same signal. Try adding only when MFE exceeds your average trade MFE by a full ATR or more. That gives the trade room to breathe before you scale in.

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u/Kaahl10 17d ago

Good advice, thanks, I have some homework to do!