I have developed a strategy. How do you think about it?

Hello guys,

I have developed a forex strategy on the weekly timeframe. I have backtested it until 2012-01 and the result is as below:

  • 2021 (so far): +823 Pips
  • 2020: +6217 pips
  • 2019: +2013 pips
  • 2018: -110 pips
  • 2017: +2060 pips
  • 2016: +1722
  • 2015: +623 pips
  • 2014: +595
  • 2013: -94 pips
  • 2012: -1765 pips

I only trade major pairs.
The maximum loss in a month is: -1030 pips

Maximum loss in a single trade: -403 pips

Total profit from 2012 to today: +12990 Pips

7 trades every week and in total 3283 trades.

Are these results acceptable to start trading by that on live account?

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I think anything with positive results is really encouraging and worth trying to be honest. It’d make sense to forward test it on a smaller account worth maybe $100 or so for a few months and make tweaks where necessary.

Was this a manual back test? Because automated backtesting on software contain a few KPIs that you can use to better analyze and understand your system’s performance.

Something like this:

It doesn’t have to be as complicated as the example listed. If you can determine some basic metrics like the one described in the article below it’ll help better understand your system.

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I agree with darthdimsky. And best of luck.

But beware that your stats are cost free, while generally a broker’s demo account is not the same as a live account in that there are extra costs involved e.g. wider spreads, commission, slippage, and exchange / deposit / withdrawal fees. While for individual trades it doesn’t amount to much, it all adds up over time.

That’s why I would avoid eToro as a broker.

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Yes, the results suggest you have something which is worth development and testing.

But beware of excessive inherent risk and black swan risk. Inherent risk is the risk per trade which is built into your system. You can cap your risk by setting a maximum risk per trade of for example 1% of your account capital. But you cannot avoid this risk: if your strategy’s win rate is only 55%, then you are guaranteed to have 45 losers out of 100 trades. Can your trading survive if you get all 45 losers in a sequence?

Black swan risk is harder to identify and might not even happen every year. Its a trade outcome defined by an unexpected dramatic price change against your current position(s).

Think of the two types of risk in terms of flying a plane. Inherent trade risk is the altitude you choose: so if you are flying along enjoying a smooth level trip, that is all fine until you realise you have been flying at only 50 metres above the ground. Black swan risk occurs when you fly at a very safe 10,000 metres but you are cutting across airline routes - it will be rare but eventually you could collide with another aircraft and there is no way back from a collision at 10,000m.

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I agree. A lot can happen in a week. Be prepared to withstand your profits dropping by 50% before resuming the major trend. Try it and see how you like it.

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Hi, you can check also wider time range, for example from 2007. Regards Greg

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Thanks everyone.

in general, the results are very good, is this how it works from a real account?

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I have backtested on Icmarkets using ctrader bot written by myself. I have not used it on real account yet. I have not considered spreads and commissions.
I have 2 problems for now. One is 2012 result that is about -1800 pips. And the other is in some currency pairs it doesn’t work. For example on GBPCAD I am down -6000 pips( total from 2012).