My closed paper trades are up $35,217. The 838 I never closed are down $170,840
Disclosure up front: I built the thing these numbers come from, it is all paper money, there is nothing to sell here and no link in this post.
I went looking for why my paper desks bleed, and the answer turned out to be an exit problem, not an entry problem. Posting the whole table because the shape of it surprised me.
Here is every closed position on five paper desks, grouped by what actually closed it. Worst row first.
| what closed it | trades | paper P&L | per trade |
|---|---|---|---|
| stop loss | 52 | -$16,419 | -$316 |
| rule exit | 10,308 | -$10,779 | -$1 |
| overdue rule exit | 6 | +$2,322 | +$387 |
| held to expiry | 389 | +$60,094 | +$154 |
Two things fell out of that.
The stop loss fired 52 times in 10,755 closes. That is one exit in every two hundred. All 52 lost, which is what a stop is for, but it means the thing I put in to control risk is basically never the thing that ends a trade. It is a seat belt in a car that has not crashed yet.
The rule exit is where the volume is and it nets out to about a dollar a trade. Ten thousand trades to lose ten grand. That is not a bad setup, that is a setup that does nothing, slowly, and pays costs the whole way.
And the part that actually stings: those closed trades are up $35,217 on paper in total. The 838 positions still open are down $170,840, and they have been open 10.3 days on average. So the closed book looks fine and the real money is sitting in trades nobody ever closed, because nothing in my rules closes a position for being old or for being wrong. It closes it when the setup says so, and if the setup never says so, it just sits.
I think the honest read is that I built entry rules and called them a system. The exit was an afterthought and it shows up as a number ten times bigger than anything my entries did.
For anyone here who swings positions for days or weeks: what actually gets you out of a trade that has stopped working but has not hit your stop? Time, a moving average, the next setup needing the capital, or do you just sit? That is the piece I do not have.