Count sign results "modestly": if you reach both profit-taking and stop-loss with the same foot, which one do you count first

This is Yohaku, who makes MT4/MT5 indicators and useful tools. What I create is decided from the complaints that appear in Gogojan's reviews and questions.

When counting the performance of a signal tool over past charts, the result changes even with the same arrow depending on the “method of counting.” In another article, I listed three promises for counting. This time I will explain those three in detail with examples. The common thread for all of them is the idea that what cannot be understood from the feet data alone should be counted in the more unfavorable way for oneself.

Conclusion first

• What matters is not the foot where the arrow appeared, but the opening price of the next foot.
• If both take profit and stop loss are reached on the same foot, count the stop loss first.
• Count by subtracting the spread at the time of entry and decision.

Counting with these three rules tends to yield results that are harsher than actual performance. I believe only the numbers that remain when counted conservatively can be used for判断.

Promise 1: Enter at the opening price of the next foot

The arrow is treated as appearing after the foot is confirmed. A foot is confirmed the moment it closes. Therefore, you cannot enter at the low or high of the foot where the arrow appeared. That is the time when the arrow has not yet appeared.

You enter after confirmation, that is, at the opening price of the next foot.

• Example: a 1-minute chart ends at 10:00 with a buy arrow → enter at the opening price of the 10:01 foot.
• We do not count having picked up at the low of the 10:00 foot. At the moment it hit that low, the arrow has not yet appeared.

At the opening price of the next foot, you get closer to the first price you can actually click on.

Promise 2: If both targets are reached on the same foot, count the stop loss first

If you decide take profit and stop loss and count them, within a single foot you may reach both the take profit line and the stop loss line. It's a high-movement foot.

The problem is that from the data of the foot (open, high, low, close) you cannot tell whether the high came first or the low came first. The order cannot be read from the foot alone.

• Example: buy entry, stop loss 20 pips, take profit 20 pips. The following foot after entry has both a high above the take profit line and a low below the stop loss line.
• In this case, it is not known whether take profit happened first or stop loss happened first.
• Since it is not known, count it as the worse case—stop loss happened first.

Counting this way makes wins appear fewer and losses appear larger. This is the core of being “conservative.” Conversely, using a counting method that favors taking profit first makes the performance look better than it actually is.

Promise 3: Subtract the spread

When entering a buy,判定 is made at the buy price (Ask), and for settlement at the sell price (Bid). The opposite is true for selling. In other words, until you enter and decide, you are disadvantaged by the spread.

• If you count profit and loss only from the difference between closing prices, the spread is ignored.
• Counting by subtracting each foot’s spread brings you closer to reality.

The effect of the spread is stronger during times when spreads widen. If the broker does not keep a spread history, you must count as 0, but in that case remember that “the spread has not narrowed.”

Also, GOLD (XAUUSD) is counted with 1 pip = 0.1 dollar. Different instruments have different pip values, so align them before counting.

Why count conservatively on purpose

There are many ways to phrase counting to make performance look better: picking at the low of the arrow foot, taking profits first on the same foot, not subtracting the spread. All of these amount to “counting with convenience while looking at past charts.”

When actually buying and selling, things will not move to suit you. Therefore, align your counting to the less favorable side. If counting conservatively still yields a usable performance, it is less likely to fail you in actual trading.

If you want to apply this counting method to your own charts,Signal Verification Tool(Counts with the promises of entering at the next foot’s opening price, same foot stop loss first, and subtracting the spread).