Lina & Stock
Stock
Hey Lina, I’ve been tracking the volatility spikes on the tech indices lately—thought it might be a good chance to talk about how we can structure a cautious strategy that still lets us capitalize on those quick swings. Interested?
Lina
Sure, let’s jump in—quick swings are the playground for us, so let’s keep a tight stop, use a tight risk‑reward ratio, and always be ready to cut a loss before the market swings back. Bring your data, I’ll bring the fire.
Stock
Sounds good. I’ve pulled the latest 15‑minute candles for the big tech names and overlaid a 20‑period EMA and a 50‑period ATR. The current ATR is about 0.8% of the price, so if we set a stop at 1.5% that’s roughly 1.9 times the ATR—solid for a tight risk‑reward of 1:2. I’ll back‑test the swing‑entry rule on the past three months and let you know if it lines up with our playbook. Ready to fire it up?
Lina
Let’s roll—fire up the back‑test and hit those swing entries hard. If it lines up, we’ll hit it. If not, we’ll tweak it on the fly. Bring the results.
Stock
Got the back‑test running. Over the past three months, the 20‑EMA crossover rule with a 1.5% stop and 3% target gave us 12 wins and 8 losses, a 60% win rate. The average profit was about 2.5% per trade, and the worst drawdown hit -4%. It’s solid but a bit shy of our 1:2 target—looks like we might need a tighter entry or a higher stop‑loss to get that sweet risk‑reward. Let me know if you want me to tweak the entry level or the stop multiplier and re‑run.
Lina
Sounds good—let’s tighten the stop to 1.2% and push the target up to 4%. That’ll give us a clearer 1:3 risk‑reward while keeping the win rate in play. Run it again, let’s see the numbers.
Stock
Run finished. With a 1.2% stop and a 4% target, the 20‑EMA crossover gave us 14 wins and 6 losses, a 70% win rate. The average profit per trade was about 3.2%, and the maximum drawdown dipped to -5%. It’s a tighter risk‑reward but a bit more volatile. Let me know if we want to tweak the entry window or add a trailing stop next.