Analysis Techniques & Strategies

# Breakeven Stop (Strategy)

The BreakEven Stop strategy uses the EasyLanguage reserved word SetBreakEven to place an order to exit all shares or contracts in all positions, once a specified profit floor has been reached. The profit floor can be specified  on a total position basis, or a one contract or one share basis. Whether the profit target amount is based on a position or per share/contract basis is determined by the input parameter.

When the profit (for the position or per contract/share) exceeds the breakeven profit floor, a stop exit order is generated at the average entry price of the position. All stop orders are stop market orders. If the price falls back to the entry price a market order is generated and sent into the market.

Breakeven Stop can be used to close both long and short  positions.

The BreakEven Stop strategy only takes effect once a certain level of profit is reached, so it is possible that in a given position, it may never take effect.

Normally strategies generate orders on the close of the bar for execution on the next bar, BreakEven Stop allows you to generate orders and exit on the same bar as the bar of entry, this is especially useful when working with longer during bars, (e.g. 30-min, 60-min, daily, weekly, monthly).

The calculation for this strategy does not take commission or slippage into account.

## Input Parameters

 Name Type Default Description PositionBasis True/False False True/False switch allowing you to calculate the breakeven floor either on a position or per share basis. To calculate profit per position, enter True. FloorAmt Numeric 1 The profit amount (in dollars) that must be exceeded before the breakeven stop is activated.

## Example

When the PositionBasis parameter is set to TRUE, the Amount parameter sets the breakeven floor as a dollar amount for the entire position based on the total number of shares or contracts in the current open position. (if you held 500 shares of MSFT and specified \$200 breakeven floor amount, you would exit at breakeven if the position ever exceeded \$0.40 or \$200 profit above your entry price.)

When the PositionBasis parameter is set to FALSE , the Amount parameter sets the breakeven floor as a one share or one contract amount.  (if you held 500 shares of MSFT and specified \$0.60 breakeven floor amount, you would exit at breakeven if the position ever exceeded \$0.60 or a \$300 profit above the entry price.)

## Orders Generated

Market Order to Sell (Long Exit) or Market Order to Buy to Cover (Short Exit)

BreakEven Stop