I’m new to the forum (I just introduced myself, but can’t paste links yet), I wasn’t sure about were to post this, I hope this is the right forum.
So, I was reading the lesson called “What is the Most Profitable Indicator?” on the School section* where the author compared strategies based on different indicators used on their own (that is, not used in combination with any other indicator/oscillator). According to the lesson, the EUR/USD gave a 30,341.22 pips in profits over a period of 5 years on a daily time frame using the Ichimoku all alone with no stop loses nor take profit levels, if I understood right. As I’m back-testing the Ichimoku on different sets, I was trying to replicate these results to no avail, so I was wondering if the author has the chance to see this post, if he/she wouldn’t mind to clarify which setting and rules were used on the example. For starters, being relatively familiar with the Ichimoku as I am, I find the description of the rules fairly vague:
[I]Cover and go long when conversion line crosses above base line.
Cover and go short when conversion line crosses below base line.[/I]
What is the “conversion line”, is it the chikou span? What is the “base line”, is it the tenkan sen, the kijun sen, the price? What about the kumo (the senkou spans A/B “cloud”), was it used as an indicator of any kind? And by the way, what means “cover” in this context? And what was the exact period that the 5-year span cover?
I hope you don’t mind me asking these details, just trying to figure what you exactly did on the example on the School of Pipsology to work it out.
Best regards and congrats for the great resource the School is!
(*) Home > Elementary > Common Chart Indicators > What is the Most Profitable Indicator?
According to the book “Ichimoku Charts” by Nicole Elliott, the term “conversion line” is the Tenkan Sen and “base line” is the Kijun Sen.
Cover = close the trade.
IMO to aviod confusion, babypip’s should have used the terms “Tenkan Sen” and “Kijun Sen”.
Also, I’ve looked over and studied the “The Most Profitable Indicator” page. I don’t want to offend Robopip but I would not pay much attention to the results of the comparison.
I don’t think most experienced traders would use or even agree with the entry and exit rules Robopips used on the back testing. The much higher score the Ichimoku received probably has more to do with poor and incorrect entry/exit rules used with the other indicators than any superior or holy grail characteristics of the Ichi, sorry
Hey d-pip, thanks for your response and clarification regarding conversion and base lines.
Yeah, the rules do are extremely basic, though the lesson states very clearly that it is just a quick comparison for illustrative purposes only. Still, I’m curious how come Robopip would get those figures, I’m back-testing Ichimoku myself nowhere those results, specially with such simple rules. Maybe you’re right and there was some mess somewhere on the test (namely entry/exit rules, maybe P/L pips calculation); hopefully Robopip could jump in and give us a word about it.
Guys, Lucero, I do not understand how can we back test anything. Results can’t be true, because we know what the price will be. You will make different entries and exits because you know what will happen later. I think the best way is to use real time trading for testing purposes. am I wrong?