Dumb day-trading strategy under test

This is just advance notice I’m demo trading an ultra- simple day-trading strategy. I can’t see any reason why it won’t work but I need to gain an experience of how reliable it is, what the pitfalls are, and how deep they are.

Its the simplest strategy. It relies on following the major trends on D1 charts of the major pairs through the London session. An uptrend is defined as when both the 20 and 50EMA’s are sloping upwards on the D1 chart: a downtrend is the reverse.

Buy every uptrending major pair, excluding any involving AUD or NZD, at the London open: exit all at the London close. Sell every downtrending major pair at the London open and exit all these at the London close. No stop-losses, no TP’s.

I’m looking forward to posting how this went next weekend. Cheers all.

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Awesome! Love some real world experiments! Look forward to seeing how it goes…

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Sounds great… But a question;

Why excluding any involving AUD or NZD, at the London open:? Just curious. :thinking:

Its just that AUD and NZD have lower leverage and wider spreads (at least from the spreadbetting companies I use). I work with the 28 major pairs so excluding the Australasian currencies reduces this to 15, which leaves more free margin for doing other things.

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Sounds good!!

What made you choose EMA instead of SMA?

I never really understood the difference between the two.

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Just as well it is a demo account. My question is “if it is a great strategy are you going to take it live??”

Cheers

Blackduck

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There isn’t much practical difference between them, but an EMA has the potential to change direction more quickly. Not sure yet whether that’s good or bad for this little strategy.

For sure. It doesn’t have a stop-loss price, the stop-loss is timed (the London close) so with random-sized spreadbets its hard to see what is being risked per trade. So for a start I’m using the minimum stake sizes the SNB firm permits.

Good luck !

But crikey, I’d be a bit worried about no stop loss on that lot :joy:

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Ordinarily, I have never had a trade without a stop-loss. My reckoning is that if I put minimum-sized trend-following positions on a bunch of pairs, then the worst possible loss would occur if all went counter-trend on the same day. Which seems possible but unlikely to occur several times in a week without some of the 20EMA’s changing slope direction, which would then exclude them from trades until a trend re-emerged.

However, it would be simple to set a SL for each pair(and I might need to do it if trading real £) using a ATR for example.

Yes, how about stop some where under 20EMA ?
I find ATR can be a bit confusing,as especially with default of 14 as it’s only telling you what the last 14 candle have averaged, if a whacking great candle turns up on number 14 the whole thing is all to cock. I suppose it would be ok with a setting of 1 as you could see the daily range for each day but you would be hoping that the future mirrors the past.
I wish you well with your project,

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You will most likely find that when trading multiple pairs like this, you’ll have plenty of hedging going on with negative correlated pairs, so chances are it won’t have too much effect not having SL’s in place.

Sounds exciting, good luck!

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Very interesting indeed! Good luck!

Sounds very interesting, especially with no SL’s. :smiley: For how long do you plan to test out this strategy before going live with it (if it proves to be profitable)? :smiley: Anyway, good luuuck! Excited for your updates. :blush:

Can’t say yet, but planning to do weekly and monthly updates on the forum.

Interesting strategy. Looking forward to your updates!

The main difference between the two is that the EMA (exponential moving average) adds more weight to the most recent candles whereas the SMA (simple moving average) applies equal weight to all of the candles used in the calculation.
This results in the EMA showing recent price movements more quickly than the SMA. It’s not necessarily better, it’s just another way of calculating. That said, I almost always use the SMA as well. Hope this answers your question!

can you post a video or images on how you trade this strategy ?

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Good Look and keep us posted!

This is a high risk strategy that endangers your demo capital by unidentified lot size - and not having a S/L. You only need a correlated currency pair run against the trend, and you could decimate your account. Unless you’re sitting watching the screen throughout the session and can close your positions quickly.

I once lost 13 straight trades on one day when correlated pairs bucked the trend. Take care, man. Read up on ATR spread, Black Swan events, and risk management before experimenting with this strategy.

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