Hi,
I have inconsistent results in the Forex world since 2015. My main aim is to find a strategy with fairly consistent monthly profits with short periods in front of the monitor! I think I have it and would apprecite everyones thoughts:
Set up:
Daily chart with EURUSD, USDJPY, GBPUSD, GBPCAD, USDCAD & AUDUSD (at the moment). 12 day Moving Average (MA) indicator.
Enter:
Price action crosses and closes on or over MA at the end of the day (currently on my chart: UT +2)
Risk management:
Take profit at 2% balance and 20 pips, this is used to calculate lot size.
No stop loss (considering a large stop loss to avoid catastrophic events).
Exit:
Take profit triggered or Price action closes at the end of a day on or over the opposite side of the MA.
I have manually backtested this strategy with these pairs back to Jan 2017 with an average of 9% a month, biggest loss in a month: -18%, biggest profit 36% with all pairs combined. total profit for the period (Jan 17-Jul 18) 307% not including charges.
All of the pairs I back tested profit (total 9), these 6 are the best, with the easiest to withstand losses, monthly.
Back tested with 10, 15, 20 and 30 take profits, 20 is the sweet spot for me with max monthly loss the key.
Has anyone here used something similar?
Am I missing something, is it to good to be true?
Does anyone make profit consistently or (irrational fear?) are the brokers onto me and will stop it in its tracks with spread and deviousness??
Hi Steve, it’s a bit of a risk as you’re only looking for 20 pips. If it was 30 pips the losses would be huge as it can move against you all day before you close out. Also it may work but the risk to reward is high. A few ranging bars up and down in a row and you lose all the gains. Why not take the bias e.g. long or short and then drop to a lower timeframe to take the trade when price moves above or below close. Risk will be lower.
Manual back testing is incredble hard, even when you hold the page at the hard right edge and step through 1 bar at a time. More so if you use indicatrs like MA’s,because they reprint constantly.
To me the main problem with manual back testing is the position of teh bars on the page - close to the bottom, you can take an upbet with some confidence. Close to the top vice versa. That is a bias we don’t even notice !
Are you saying you use a 12 day moving average to hit a 20 pip target, without using a stop loss ?
How do you know how to get out of losing trades then ? or am I misunderstanding. Try letting us see your system in detail ? Then aybe we can answer your question with some understanding.
Hi Rickster,
Actually if i have a larger take profit, the losses would be slightly smaller, a 30 pip take profit would still be 2% of balance therefore a 60 pip negative move and close would be -4% with a 30 pip take profit @ 2% balance as opposed to a 20 pip take profit @ 2% would be -6% with a 60 pip negative move and close for example.
On backtesting, it seems there is mainly profit across the 6 pairs long term and fairly short term (monthly), on any solo pair there would be bigger losses but the others cancel these out mostly!
My attempt to keep it as simple as possible with minimum time in front of the computer steers me away from multi time frames, and I havent the brain power or inclination to calculate bias!!
Thanks for the feedback
Hi Falstaff,
Yes I tried my damnedest to be objective as possible in back testing but there may be some sway, for example “would I have entered that particular trade if I could’nt see the future?” However, of all the systems I have backtested this way, this is the easiest to be objective, simplest to read and most profitable, so I went with this this.
The system:(unfortunately not having much luck with uploading a screen shot)
x6 pairs
Daily chart
12 day Moving Average (MA) plotted
Time of daily candle closing UT+2
price action closes (or approx 10 mins before closing to avoid high spread just after) on, directly on, i.e. the junction of wick and candle lies on the MA, or over, distinctly over the MA, i.e. the candle now covers the MA:
open trade in the direction of this candle.
set a 20 pip Take Profit @ 2% balance
Winning trade-Take profit triggered
losing trade-Price action closes at the end of a day (UT+2) over the opposite side of the MA or directly on the MA, potential for multiple days on the trade at least 24hrs till determining if its a losing trade, and large negative moves.
does that make sense?
It’s definitely interesting mate. Yeah I agree try it live with a small size and see what happens. keep us updated and I’ll be checking it from time to time too so will ask you as and when it sets up. Let us know when you start. Good luck- hopefully onto something!
Oh also what was your average pip drawdown in each pair before it hit target? That way you might be able to have a stop loss just below the average and then your risk is reduced.
on the backtest the biggest loss was 160 pips ish, with bigger negative moves.
as mentioned, i might look at a large stop loss to avoid catastrophic events such as brexit, more probable to avoid trading when these events are forecast, but to keep some balance i may have a 50% balance stop loss in case of events such as EURCHF dropping like a stone relatively out of the blue(?).
Its risky without a stop loss but I’m going for it today!
I have decided to not use a stop loss whilst trading on daily charts to allow for the flexibility of movements in 24hrs, I have found that price action may go in a set direction during a national trading day, but, referencing this system, it will fluctuate through the whole day but; either initially or eventually go in the direction predicted enough to trigger the take profit, enough times to be profitable.
Tbh not having a stoploss made it easier to accurately back test too
This may seem foolhardy, however: if the price action closes on or over the indicator, and if my back test is correct, this still leaves me with many months of profit long term. Fingers crossed, early days!
Hey mate. Just checked those pair for the week gone and it looks like one winner but I think a few of them are in losing positions. And usdcad just took a 80 90 pips loss. So already in drawdown but good luck in other positions. I think you’re playing the long game anyway and that it will smooth out over the months.
Hey, Ive gone with 30 pip take profit (less profit but smaller losses long term) and forward testing with 1% of balance to sort out tweeks: mainly with when to open the trades (23:59hrs or 00:01 hrs!!). I am .057% up after 9 trades, 2 of these losses!!
Long term winner???
