Which will create more profit?

I have been thinking about setting up a test for my profit taking in order to see which style will create more profit over the course of a month.

Here is the test:

Trading off the 4hr charts accross all pairs.

Lot #1 in a placed trade would have a stop of ATR(100 periods)
Lot #1 would have a limit of ATR x2.
Lot #1 stop would be moved to break even at 1x ATR.

Lot #2 would have a stop of ATR(100 periods)
Lot #2 would move the stop every 1x ATR move in the direction of the trade until the stop is hit.

It seems like lot #2 will be more profitable in the long run when the market continues to make a large move. The only down side seems to be when the market hits that 2xATR mark and falls back.

In one hand you have the market hitting a 2:1 goal more easily and in the other you have given up pips in the hope of a larger move.

I would like some opinions on which system you believe to be better. I plan on testing this out for a month unless I get a definitive answer or a way of backtesting it.

I know people will say do half with one method and half with the other. My answer is that I would like to simplify my trading and would like to use one exit stratagy. The question is which one is more profitable in the long run?

Just renewing. Any opinions?

I don't use ATR but your dilemma seems to be to either take what profit is available, or to have a larger target but risk giving up some profit.

I guess only a back/forward test will give you a definitive answer but maybe there's a third choice, trail your stop every xx pips to lock in profits. That way you're allowing the market to move further in your favor and not cutting a trade short as it's making money, but if it does reverse/retrace you wouldn't be giving up as much profit.

Is it a good idea to have a hard and fast rule though, wouldn't it be better to adjust according to each individual trade and market conditions, time of day, day of the week/month, impending news etc etc etc?

I think it depends on your type of trading as to which one you should pick. I have faced this dilemma many times myself and I think it depends on your trading system.
If you go with the set TP then you can easily work out your risk, reward, win rate and expectancy - eg risk 1% reward 2% win rate 50% = profitable. If you go with the trailing stop then you know your risk but your reward will be variable anywhere from reward 1% to 5, 10, 20 or whatever.
You will probably miss out on alot that could have been 2R but will end up with a few crazy 10R or 20R or whatever.
You have to weigh up what the trading style will be and how that matches what you want.

Given that you want a 'statistical', one-size-fits-all solution, the best that you can do is back-test, but I suspect that if you do so over a large enough sample, then both results will come out approximately even. In my experience, it's not easy to gain a mathematical edge from exits. Having said that, most of my testing has been performed on lower timeframes.

The simple answer is to let profits run as far as possible when prices are trending strongly, and look to bank your profits earlier when they're not. The logical place to do this is where your analysis tells you that prices are more likely to reverse, e.g. at obvious S/R levels. Experience and judgment will tell you which condition exists, and how to play it optimally.

Thank you for the replies. They really made me look at my trading in a different way. To not so much look at always pulling the most from the market but pulling it in the way that I set out to consistantly and looking at the reasons why this is so. I just have to decide how I want to now.

My personality lends itself to both hitting singles and homeruns. But in the end, I think I like seeing that homerun a little more...