TRIED & TRADED
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Exit 7 — the roll

  • A roll closes the position and opens another one, usually further out in time.
  • It is on this list because traders count it as an exit. A test can’t — it is two trades.

What it is

  • You buy back the position you are in. That trade is over, and it has a result.
  • You sell a new one, further out in time, often at a different strike.
  • Usually for a credit, which is what makes it feel like progress.
  • The exposure continues. Nothing has been closed in the sense that matters.

A roll is not an exit. It is a new trade wearing the old one’s name.

Why it is so appealing

  • The screen shows a credit, so the day reads as a win.
  • The loss on the closed leg never appears as a closed losing trade.
  • The account keeps a position that still might come good.
  • All three of those are true, and none of them is evidence the roll was the right move.

What it does to your record

  • The realised loss is real and belongs to the trade you closed.
  • Counted as one long trade, a sequence of rolls hides every one of those losses inside an open position.
  • The win rate stays high because losing trades are never booked.
  • The risk usually grows, since rolling for a credit often means going wider, further out, or bigger.

How to record it honestly

  • Book the closed position with its actual result, good or bad.
  • Open the new one as a new trade, with its own entry date and specification.
  • Report both. A strategy that needs rolls to look profitable has just told you something important.

Where it bites

It converts a defined risk into an open-ended one

  • Each roll extends the time you are exposed.
  • Rolling for a credit often means widening, which raises the maximum loss.
  • A trade sized correctly at the start is not necessarily sized correctly three rolls later.
  • The number you sized to has moved and nobody re-checked it.

And it makes a strategy untestable

  • “Roll it if it goes against you” is not a rule — roll to what, when, and how many times?
  • Without those, no two people run the same strategy.
  • A rolled strategy can be tested, but only once the roll is specified as tightly as the entry.
The honest version

Rolling is a legitimate tactic. What it is not is a way to avoid a loss — the loss happened when you bought the position back. Everything after that is a new decision, and it deserves to be judged on its own merits rather than on the hope of rescuing the last one.

Common questions

Is rolling always bad?

No. Rolling a tested strategy under a stated rule is fine. Rolling because you don’t want to book the loss is the problem, and only one of those two can be written into a specification.

Does rolling for a credit mean I haven't lost money?

No. The credit is what you were paid for taking on a new position. The old one closed at whatever it closed at, and that result stands.

How should a backtest handle rolls?

As separate trades, with the roll condition specified in advance. Anything else makes the trade count and the win rate meaningless.

Is rolling the same as adjusting?

Close enough for this purpose. Both change the position rather than ending it, and both need to be recorded as new trades if the results are going to mean anything.

How this shows up in our tests

No roll result is published yet.

When one runs, rolled positions will be reported as separate trades with the roll rule stated — and the strategy’s numbers will be shown both with and without them, because the difference between those two views is the whole point of this entry.

The hub

The seven ways
to exit

The umbrella

What is an
exit rule?

The finding

Why the exit changes
the answer