Although I am not much in favor of applying this strategy completely, I must admit that it is great.
Because:
-
I didn’t backtest it for months but for the last 5 weeks it produced great results.
-
R/R ratio seems proper. (1:2)
But as I said earlier here, it has some flaws and I’d like to elaborate.
First of all, it has NO fundamental basis. The concept of stop order is based on the idea that if price goes that much up/down it is going to continue to go up/down, so it is safe to buy/sell. This logic can be useful when the critical levels pre-defined. But in this strategy, most of the buy/sell levels are the recent critical levels. In my opinion it would be safer to trigger an order after a support/resistance level gets broken. See this week CADJPY sellstop level, it speaks for itself. I have been following this thread sinc ethe beginning and each week I see this happening.
Regarding the fundamentals, the thinking behind placing a stop order needs to have a Plan B. Actually each trade with a sensible perspective must have Plan B. But our Plan B is 100 pips SL and expecting the counter order to get triggered. Now remember what happened last week. Everyone is amazed at the results but let’s not forget, most of the profits last week is due to the FOMC minutes after which USD lost greatly. Also the same day the JPY lost against all other currencies. If FED had stated otherwise, all the USD pairs would be in the red and hit SL levels. Let alone making any profit, you could lose 100 pips for 12 pairs, that means 1200 pips loss. (12 out of the 15 pairs for which the signals are published have are USD and JPY pairs).
Another weak point in this strategy is the inclusion of some crosses in the batch. Example: This week EURUSD, EURJPY and USDJPY sellstops are all triggered. You are all selling these pairs. When you sell EURUSD and EURJPY, you sell EUR twice and buy USD and JPY. But in this case selling also USDJPY is pointless. Each week there’s a contradicting trade in the batch that makes indecisive moves. Especially EURAUD and GBPAUD. If you are only interested in the results, that’s fine. But I for one prefer to know what I am trading.
Of all the 15 pairs published here, I prefer to trade only EURUSD, EURJPY, GBPUSD, GBPJPY, AUDUSD, AUDJPY, NZDUSD and NZDJPY. I don’t trade USDJPY, USDCAD, USDCHF, EURAUD, GBPAUD, GBPCHF, CADJPY and CHFJPY. Actually I did a performance test for different batches from these pairs and the results are quite funny.
I made 4 different batches which don’t contain contradicting ones. Namely I don’t buy one currency in a pair if I sell the same currency in another pair.
They are:
BATCH 1 includes EURUSD, EURJPY, GBPUSD, GBPJPY, AUDUSD, AUDJPY, NZDUSD
These are the best performing pairs in the list.
Compare the results for 15 pairs and this batch separately:
15 PAIRS BATCH 1
WEEK 1 1051 429
WEEK 2 660 455
WEEK 3 1176 757
WEEK 4 519 448
WEEK 5 1208 902
As you see most of the profits come from this batch.
BATCH 2 includes only USD pairs & JPY pairs
15 PAIRS BATCH 1
WEEK 1 1051 625
WEEK 2 660 615
WEEK 3 1176 886
WEEK 4 519 484
WEEK 5 1208 1125
BATCH 3 includes only EUR pairs & GBP pairs. It has also very consistent results.
15 PAIRS BATCH 1
WEEK 1 1051 447
WEEK 2 660 462
WEEK 3 1176 574
WEEK 4 519 526
WEEK 5 1208 509
BATCH 4 has EURUSD, EURJPY, GBPUSD, GBPJPY, AUDUSD, AUDJPY, NZDUSD, EURAUD, GBPAUD and GBPCHF.
15 PAIRS BATCH 1
WEEK 1 1051 855
WEEK 2 660 500
WEEK 3 1176 1067
WEEK 4 519 483
WEEK 5 1208 985
Of course, you may think that it would be more profitable to trade all 15 pairs, because more trading equals more pips. But as long as you don’t know what you do and why you do it, someday you will lose and you won’t know why you lose.
What I explained here may be found pointless, nonsense, etc… And of course maybe my thinking is wrong. But this is how I see it and I’d like to hear other opinions, criticisms, etc…
