Which came first, the stop or the target?

[Fairman]

Which came first, the stop or the target?

A bar with a high above the target and a low below the stop leaves a question: which was hit first? On bar data, nobody knows.

Backtesters answer in different ways. Some assume the stop was hit first, which is conservative. Some assume the target, which is generous. Some use an arbitrary rule based on how the bar closed. Each choice changes the results, sometimes dramatically.

For scalpers with tight stops and targets, a large share of bars can contain both. The assumption then drives the whole outcome.

Tick data resolves it by showing the real order. A test on ticks might reveal that half the trades the bar test counted as wins were actually losses, because the stop came first.

If tick data is unavailable, the conservative rule is the safest default. A strategy that still works when every ambiguous bar is treated as a loss has a real edge.

Some traders also run both assumptions, stop first and target first, and check the gap between the two results. A narrow gap means the strategy is not sensitive to the ambiguity. A wide gap means the result depends on a guess, and should not be trusted.

How does the backtest handle bars that touch both the stop and the target?