Constructing your individual buying and selling technique from scratch is troublesome. It is loads simpler to discover a buying and selling technique that another person is buying and selling efficiently and tailor it to suit your persona.
With that in thoughts, I at all times preserve my eye out for brand new buying and selling methods and check them out to see in the event that they work or not.
I discovered this technique in a Kindle e-book and it appeared prefer it might work, so I gave it a check. On this put up, I am going to present you ways the technique works, the testing plan that I created and the outcomes of my testing.
On the finish of this put up, I am going to present you potential upgrades to this technique and the place you possibly can see my further testing outcomes with this technique.
The Buying and selling Methodology Defined
This buying and selling technique comes from the e-book MT4/MT5 & TradingView Excessive Likelihood Foreign exchange Buying and selling Methodology by Jim Brown. I do not know Jim and I wasn’t paid to evaluate this e-book.
This e-book was bought with my very own cash.
I really had this e-book in my Kindle library for a few 12 months earlier than I acquired round to studying it. One thing about it drew me in, however the spammy title additionally put me off a bit.
Once I lastly opened the e-book, the buying and selling technique made sense and I learn the entire e-book in 1 sitting.
It is a simple learn with respectable footage as an instance the ideas.
Jim is the inventor of this buying and selling technique and he makes use of it to commerce for a residing. Since that is Jim’s technique, I will not go into the entire particulars.
You will have to purchase the e-book to get all of his buying and selling strategies, insider ideas and obtain the customized indicators that include the e-book. Nonetheless, I am going to present you adequate so you possibly can see what I did.
In case you like my outcomes, you get the e-book. If not, you possibly can search for one thing else.
On the upside, the fundamentals of the buying and selling technique are easy.
It is made up of three shifting averages and a couple of momentum indicators. The strategy seems for modifications in momentum and marks the chart at factors the place you possibly can doubtlessly get in at turning factors.
As you are taking a look at a pattern chart, you possibly can most likely inform that you need to use the alerts in a few other ways. You may both take trending trades or countertrend trades.
I made a decision to take development trades solely in my check.
The Testing Plan
The beauty of this e-book is it exhibits you some wonderful entry strategies. On the draw back, it is mild on exit methods.
Actually, there are not any exit methods.
Jim offers some ideas on how one can doubtlessly exit a commerce, however nothing concrete.
That is one of many greatest downsides of many in any other case helpful buying and selling books. They do not provide you with a whole buying and selling technique.
There might be many the reason why the creator selected not to do that. Perhaps his exits are primarily based on studying the market, as a substitute of getting set guidelines.
Nothing incorrect with that.
However from the standpoint of somebody studying the e-book and eager to learn to commerce, it leaves the reader hanging.
That is why I am sharing my outcomes right here.
Nonetheless, the e-book does provide you with an ideal start line to create your individual technique.
The opposite draw back is that this e-book does not provide you with stats on the buying and selling technique.
Once more, I get why authors do this. They do not wish to create expectations or get offended emails from readers who do not get the actual identical outcomes resulting from a large number of causes that might take a couple of hours to diagnose.
Due to this fact, it was as much as me to provide you with my very own exit technique.
However the place to start out?
I’ve discovered that the simplest solution to begin testing a buying and selling system that does not have set exits is to make use of a 1X threat revenue goal. So if the cease loss is 100 pips, then the take revenue may also be 100 pips.
This would possibly not work in all circumstances, but it surely’s a fast and soiled means to assist me see if a technique has potential or not.
So here is the buying and selling plan that I put collectively to do my first backtest of the ideas on this e-book.
- Pair: EURUSD
- Timeframe: Each day
- Danger per commerce: 1%
- Entry: Development trades solely. Watch for shifting averages to stack up so as. Brief to lengthy (high down) in an uptrend, lengthy to brief in a downtrend. That is similar to different development buying and selling strategies that use a number of shifting averages. As soon as the shifting averages are stacked within the appropriate order, I watch for a dot on the chart, whereas value bounces off one of many shifting averages. Purple dots are sells and inexperienced dots are buys. Open the commerce as quickly because the candle closes.
- Cease loss: Set the cease loss on the opposite aspect of the final swing.
- Take revenue: 1X threat
- Commerce administration: None, set and overlook.
Lengthy Instance
On this lengthy instance, I entered a commerce on the inexperienced dot marked by the arrow. It was a commerce that hit the revenue goal simply.
As you possibly can see, this commerce made rather more after it hit the take revenue. I am going to get into extra about how I used to be capable of make the most of these “further” strikes and enhance the output of this fundamental technique, later on this put up.
Brief Instance
It is a comparable concept right here. Enter on the shut of a red-dot candle, when the shifting averages are lined up appropriately and value bounces off the brief, medium or lengthy shifting averages.
Testing Methodology
I’d usually use Foreign exchange Tester for a method like this, however the customized indicators are solely out there for MT4, MT5 and TradingView.
Nice.
So I fired up TradingView and a spreadsheet to start out backtesting. This technique takes a bit longer than utilizing Foreign exchange Tester, but it surely will get the job finished.
The info in TradingView goes again to 2003, so it is sufficient to do a strong check.
Testing Outcomes
- Pair: EURUSD (day by day)
- Trades: 84
- Win fee: 75.0%
- Whole return: 42%
- Max dropping trades in a row: 2
- Max drawdown: -3%
- Testing interval: Could 7, 2003 to January 19, 2022 (~224.5 months)
- Common return: 0.18% per 30 days
Video Model
If you wish to see the ideas in motion, watch this video.
Remaining Ideas
I contemplate this a superb check.
The technique works.
A max drawdown of three% is excellent.
However that is simply the place to begin. There is perhaps methods to extend the return of this technique.
If you wish to be taught the entire ideas and methods that Jim teaches, get the e-book right here.
To get all of my future updates the place I check new and doubtlessly extra worthwhile variations of this technique, be part of my non-public membership group right here.
