The 4R Target Illusion vs 2.0R Split Trailing
With a 4R target, the actual reach rate was only 5.2%. Why taking half at 2.0R and trailing the rest works.
Targeting 4R (+25%) sounds great on paper: risking −6% for +25% gives a theoretical 4:1 payoff ratio. But simply asking for a high price does not mean the market will pay it.
Across the S&P 500 large-cap universe (2015–2026, 950 trades), we measured the empirical reach rate for different R-multiples.
Empirical reach rate by target R
| Target R | Trades | Win% | Target Hit% | 25d Timeout | Stop Loss | Realized Payoff |
|---|---|---|---|---|---|---|
| 1.5R | 1339 | 48.8% | 40.6% | 10.9% | 47.9% | 1.35 : 1 |
| 2.0R | 1172 | 44.9% | 28.7% | 19.7% | 51.1% | 1.50 : 1 |
| 2.5R | 1069 | 43.3% | 18.4% | 28.2% | 52.9% | 1.56 : 1 |
| 3.0R | 1016 | 42.9% | 12.3% | 34.5% | 52.7% | 1.64 : 1 |
| 4.0R | 950 | 42.2% | 5.2% | 41.1% | 53.3% | 1.71 : 1 |
The round-trip cost
The 42% win rate under a 4.0R target is deceptive. Only 1 in 20 trades (5.2%) ever hit 4R; the remaining wins were trades held for the full 25-bar time stop that liquidated at an average of +1.46R.
Tracking the 259 trades that peaked above +2.0R revealed the real damage:
- Only 49 (18.9%) reached 4.0R.
- 75.7% (196 trades) lingered without reaching 4R.
- 5.4% (14 trades) gave back all gains and round-tripped all the way to a −1.0R loss.
Conclusion: Option C split exit
Expecting +25% within 25 days on large caps is unrealistic. Reaching 2.0R (+7% to +12%) occurs in 28.7% of trades. We adopted Option C:
- First 50%: Liquidate at 2.0R to bank gains and maintain capital turnover.
- Remaining 50%: Move stop to breakeven (0R) and trail −2.0R from peak (floored at +1R) to capture extended trends.
On Sep 3, 2026, the DE position was fully exited at $709.77 (+11.85%) following this exact logic.