Reality check requested

I appreciate the depth of knowledge represented by the members of this forum and am requesting your assistance with a reality check. Ultimately, I want to answer one question: “Should I pursue this trading strategy?”. By “pursue” I mean (1) analyze the remaining data available (a non-trivial task), and (2) learn to code (also a non-trivial task) so that my trading is hands-off and not subject to human psychology.

Trading platform: OANDA
Time period: Jan 2005 - Dec 2010
Chart: H4
Entry: Based on one indicator–Hull Moving Average
Exit: Based on my own analysis of slopes of lines
Results: So far, 12,517 pips (175 pips/month average)

A little deeper dive.

Avg duration of long positions: 11.1 days
Avg duration of short positions: 6.2 days
Max duration of long positions: 142.2 days
Max duration of short positions: 62.0 days

Avg extreme in opposite direction of long positions: 164.0 pips
Avg extreme in opposite direction of short positions: 135.0 pips
Max extreme in opposite direction of long positions: 514.8 pips
Max extreme in opposite direction of short positions: 696.2 pips

(Have a few graphs, but unable to upload as a new user.)

Am I on to something–or am I on a fool’s errand?


Back tests can often miss many intricacies and presume a lot e.g. slippage. I’d take a small amount of money and live test it for six months and see if your results are as you would expect.

If you have optimised it to some weird ass Hull MA number think of why that could be and always try to Monte Carlo that bad boy.

If you can post some chart pics with markups to show what you do then that might clarify things a bit and we can provide our input accordingly.

What does the time period: 2005-2010 represent. Was that when you the idea was conceived?

Thanks for the advice, TRADESHOCK. This is exactly the type of feedback I’m seeking.

What would you consider to be a weird Hull MA?

Thanks for the quick reply, QuadPip. Unfortunately, I am unable to upload pics due to my newness on the forum. Honestly, though, I’m not really concerned about the mechanics of my trading strategy. I know that piece is solid. I’m more interested in learning whether the bigger-picture aspects are sound.

For instance, in the original post I list the average and maximum durations of my positions. Will overnight fees (rollover rate? swap rate?) eat up my gains?

Also, I posted the average and maximum moves opposite my positions. Is it foolish to think I could keep enough margin to avoid margin calls on those wide of swings?

Lastly, just in general, is 175 pips/month respectable results, or do you all make that in an afternoon? On a scale from 1-10, with 1 being poor and 10 being great, where does that fall?

Hi, Melvic. Nothing special there. A 15-year time frame (Jan 05 - Dec 19) seemed like a valid test of my trading strategy. That coincided nicely with something I noticed with OANDA’s historical data. Specifically, earlier than Jan 05 they don’t have high and low data listed. I wanted highs and lows in order to know how large of swings I’d need to be able to endure.

So, I started with Jan 05. I have stopped temporarily at Dec 2010 for this reality check. As you can imagine, this is a laborious process (OANDA doesn’t sell historical data for H4). Before proceeding with the analysis of the remaining data, I wanted to make sure I was not missing something obvious in my trading strategy.

if youre in consistent profits why not !

Back tests are good and all, but it doesn’t paint a clear picture. I always test mine at least on demo on the real market.

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What I mean is if its not working on for example a HMA of 100 but does on a HMA of 107 its probably over optimised.

I won’t be able to tell without a picture of the marked up charts so whenever you’re able to upload some pics if you want.

If you’re consistently profitable and if you’re satisfied that your strategy is providing you with the maximum pips available, within its boundaries and capabilities, then that should suffice. There are traders who make fewer pips and there are those who make more pips than the 175/mo. However, you cannot compare them with yourself since they may be trading strategies different than the one you use. Also, when there is a discretionary component you end up with apples and oranges.

A better yardstick than pips, for performance measurement, is the ROI or percent gain/loss for an account in a given time frame. A trader could be making fewer pips than you per month and still produce a higher ROI than you do. It all depends upon the trader’s ability for trade/risk/capital management.

I guess because I’m a belt-and-suspenders kind of guy!

Thanks, everyone, for your input and patience. I appreciate it.

good advice