Hello all,
I would like to submit a trading strategy for discussion that I think has a lot of potential. It would no doubt be very easy to turn into an EA. The strategy stems off of Xman’s S3 system at FF, which is in turn an offshoot of Big E’s TMS system. No doubt many of you are already familiar with these strategies and there are already some EA’s in place, written by Mr. Hopwood I believe, that you may have tried.
So first the dessert, before the meat and potatoes:
I did a visual backtest of the strategy on the E/U from the first of the year forward. I’m proposing it to be traded on the H4, so not a large data set but it shows a lot of promise.
Now a caveat here, I’m using the Heiken-Ashi and the Trader’s Dynamic Index, so for the backtest it was a bit difficult to tell exactly where the entries and exits would fall in relation to the TDI. I tried to be conservative in my estimates, going with the nearest hew bar opening, as that’s when the TDI updates.
Having said that, the attached pdf is an excel file of the trades that would have been taken this year and the results. Lot sizes were a bit difficult to decide on as I didn’t want to try and adjust them to each trade, so I went with an average of about 50 pips. Based on that I figured a risk factor of 1% per trade to determine lot size. I do feel in live trading, which I have begun, the actual stops may be lower, allowing a larger lot size for the same risk %, enabling a faster equity growth.
From Jan 1st through April 23rd there were 22 trades taken. There were 16 winning trades for a total of 1,344.4 pips and 6 losing trades for -92.8 pips. Total account equity increased by 35.44 % during that time.
The Strategy:
As mentioned I’m using the Trader’s Dynamic Index with alerts as my only indicator (other then trade info indi’s) and the Heiken-Ashi synergy bars. I trade it on the H4 as I feel that gives more opportunity for trending then shorter time frames. While I have done a cursory eyeball on other pairs (and they look promising) the backtesting is on the E/U. Low spreads are always a plus. All indi’s and template are attached.
Entry:
Quite simple. When the green TDI comes out of the blue bands and then crosses red we buy/sell. Stop loss is set below/above the last swing low/high which will be nearby.
Exit:
Exit when green crosses back over red in the other direction. Occasionally, after a long run, our exit will be an entry in the opposite direction (providing that the green has traveled all the way back outside the blue bands before crossing back through.
It’s that simple! Maybe too simple. Time, and further forward and back testing, will tell whether these few months were an anomaly or not. I think that as pairs transition from trending to ranging we would have to adjust which ones we will trade.
Let the wrangling begin.
