Regarding the market and stocks.
Everytime I enter a position (buying a stock let's say) I have a starting point and a desired one where I'll take the profit (selling it).
Since it happens so little times that I get to that profit I've decided to split the profits in parts, Partial Profits.
Let's imagine that I buy 1000 stocks at a certain price. At that moment we are, in terms of distance between the starting point and the maximun profit, at 0. If the movement goes against me I'll lose but that's OK. So, 0 is where everything starts and 10 is where maximun gains happen. In between I have the partial profits (1, 2, 3 all equally distant between each other) so my question is, which % of my 1000 stocks should I extract/sell at each point? For that I have a set batch of data out of a backtesting enviroment.
According to my numbers, I simulated 434 tries, these are the numbers I reached to each partial profit. (I left aside the times that the transaction goes wrong).
As expected, numbers keep decreasing as we approach the final one. At first I assigned 10% of the entire position for every partial profit. That would mean when Partial Profit #1 happens, I sell 10% of my 1000 stocks and keep the other 90% waiting for other Profits. When Partial Profit #2 happens, I sell another 10% leaving me with 80% and so on. After looking at these numbers I realize there should be a different set of percentages for each profit number that would maximize the gains.
Is there a way or mathematical equation to get the best factor? Just for the purpose of confirming it I did a quick run of this set and yes, ending number was way better, but is there a way to knowing the best approach? And maybe it can be applied to other backtesting results since what I'm showing here is just one example.
Thanks in advance
PS. In case you can make use of the information: Let's say I reach Profit #5 and then the stock goes down, I'd sell the remaining % at Profit #4.