Simple 21, by Hugh Kimura. A few months ago, I wrote about why even simple trading systems do not end up actually being that that simple. This is mostly due to the fact that they need to be tested, retested and continually evaluated. But let's forget semantics for a minute and take a detailed look at a system that has no indicators and very defined entry, exit and stop loss points. By most people's accounts, this is probably the definition of a simple Forex trading system. In this post, I will tell you how I got the idea for the strategy to test and the exact parameters for my testing. I will also allow you to download the spreadsheet with all of my backtesting results, so you can follow along at home, if you so desire. What I'm going to show you is the first two steps in the Strategy Development Framework and I hope that it will get you excited enough to come up with some ideas of your own to go test out and have fun with. The first step in the Strategy Development Framework is the idea. Not rocket science, but it can be a daunting task, given all of the possibilities out there. Yeah…if you read the Forex forums, there is no shortage of Lamborghini manifesting, private island buying, lingerie model dating, trading ideas in the world. Of course, the trick is to figure out which ones actually do what they say and which ones are a Titanic-sized crock of shit. Obviously, you won't really know which ones are legit until you test them out, but there are a couple of different ways system you can go about finding an idea to start you off. First, you can just pick any random ass system that looks good to you. This may seem like a terrible idea, but it can have it's pluses. On the bright side, you will probably figure out something that doesn't work. But you may also get other ideas on how you can get the method to work and that may lead you to something that actually does work. The second and preferable method is to find someone who actually knows what the hell they are talking about and test what they are recommending. In my case, I got the idea from two sources. Super case you are wondering, Kangaroo Tails are just another name for Yo Yo's, Unicorn Horns and Pin Bars. In addition, after purchasing the Chris Lori AUDJPY Trading Course, one of the many things that I learned was to only trade that pair long. That is just Chris' opinion of course, but I found that to be a good idea more on that in the Backtesting Results section. System also talked about it a little in a November post that you can read here. Before we move on to the second step on the Strategy Development Frameworkwhich is Backtestingwe have to define our idea so we don't go changing shit in the middle of testing. That is actually very easy to do and will not give us an accurate system of how our system might perform. We also super want people to think that you are a crazy person when you tell them that you have a simple system that is profitable. So I broke out my handy-dandy Strategy Template and wrote down the super to my system. Before we go any further…a couple of notes on this Idea. This was all done Backtesting, so no real money was risked. And of course, past performance does not equal future results. Here is what the final results looked like from testing it on the Daily chart from January to September All testing was done on Forex Tester 2. If you would like to see all of the results, you can download the zip file with all my trades here. Note that there are only trades until Junebut that is only because there were no more trades after that. As I mentioned above, I did test this trading strategy both long and short on this pair and the results where not nearly as good. Therefore, I decided to go long only…just for this pair. As you can see, it was a pretty decent result. Unfortunately, Forex Tester sometimes drops the ball on drawdown, as it did in this case, showing a big fat zero. There are other ways that this system could be tweaked to try to improve the performance. Just a few thoughts off the top of my head…. I could go on for awhile on what I could do. But I just wanted to give you some ideas on how to test a very simple trading strategy and I hope that you will be inspired to test this method or another system that you have been thinking about. If you tried testing this strategy, what where your results? If not, what can you test right now forex might move you forward? It doesn't have to be perfect, just define it and test it. I would love to hear your results in the comments below…. Links on this page are affiliate simple. We do make a simple if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we personally use and believe in. A portion of the proceeds to my charity partner. Hi, I'm Hugh Kimura and my goal is to create a full-time income, trading Forex. If that is your goal too, then I invite you to join me on the journey. I will uncover what works and what doesn't Click here to follow me on Twitter. All information is for education purposes only and is not investment or trading advice. February 10, at 4: As for me, I love to trade this of GU and GJ as their volatility are very high and normally if I see this of the 4 hr I would scroll down to the 15 min and place my position of the previous high or low to avoid getting whiplash. And let price takes my position. Of course if the forex is strong that the stop hunts start coming in and my position will get compromised. But overall one of your interviewees has this strategy mention and it was his consistent winner?? February 10, at 6: Yup, that is where Walter mentioned he got it from. Appreciate the thoughts on how you trade it. No one mentioned trading this strategy consistently except for Adam, who has some great notes about how he trades it above. February 6, at 4: Nice post Hugh, does the fx tester give you results at to when the super occurred? I noted that it showed 0. February 6, at Thanks Andrew, not too sure what you mean…but I did forget to post the spreadsheet when you read it, but it is posted now. It will show when the setups happened. Also, when you double click the trades in Forex Tester, it will take you to where the trade occurred on the chart. Yeah, that is a second level review and would become more apparent in forward testing. Some nice testing there mate, and I can confirm that in the wild this method works well also, as I have traded something along the same lines off hourlies and 4H charts for over 7 years. Never my sole method, but a part of the super certainly. My main difference is I trade it in both directions, and I aim beyond the previous pivot as a target. I apply basic wave theory here, working off the theory that if price has pivoted off a pin bar, it will at least make a 3 wave move, with the 3rd, being the impulse, pushing it through the previous pivot, running some stops and adding a little icing to what is already a tasty cake. At time it turns a winner into a break even or small gain, but others that impulse can go like the clappers as well. I an a long long long way from being elliot wave guy, all those rules just seem like complications for an already complicated profession, but the basic 3 wave theory forex most of the time. Very cool, thanks for the tips! Interesting that you bring up Elliot Wave. Yet another thing to test…. One thing to consider that really helped with my trading, as well as backtesting, on daily charts was to make sure the time is what you want it to me. Good point Micah, thanks for the tip. Your email address will not be published. Notify me of followup comments via e-mail. You can also subscribe without commenting. Trading currencies or any other financial market involves substantial risk, and there is always the potential for loss. Your trading results may vary. No representation is being made that any associated advice or training will guarantee profits, or not result in losses from trading. Neither the products, any explanation or demonstration of their operation, nor any training held in conjunction therewith, including, without limitation, through blogs or forums, in conjunction with any advertising and promotional campaigns should be construed as providing a trade recommendation or the giving of investment advice. All content on this website is for informational purposes forex. Before deciding to invest in foreign exchange or any other financial marketyou should carefully consider your investment objectives, level of experience, and risk threshold. You could sustain a loss of more than your initial investment. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent certified financial adviser if you have any doubts. Start Here Resources Products Blog Forex. What I Will Show You In this post, I will tell you how I got the idea for the strategy to test and the exact parameters for my testing. Anyway…so I combined the two and decided to test Pin Bars, trading long only. But that's not all… Defining the Idea For Testing Before we move on to the second step on the Strategy Development Frameworkwhich is Backtestingwe have to define our idea so system don't go changing shit in the middle of testing. Here is how I filled out the Template: AUDJPY Pin Bars Indicators Used: Price action only, Daily chart Entry Signal: Pin bar at previous simple level. Only look for horizontal support for this test. Enter on open of next bar after current pin bar. Only take long trades. NA Take partial profit: Hit profit target, stop loss or breakeven. Here is a picture of what a typical setup would look like: OK, moving on to… The Testing Results Here is what the final results looked like from testing it on the Daily chart from January to September Conclusions As you can see, it was a pretty decent result. I'll have to run it through Excel to manually to figure out the drawdown. I could try to pyramid at system certain point to maximize the winners. I could look for ways to eliminate losers by only taking trades that meet a 2: The 7 Unconventional Rules of Maverick Forex Traders. Related Posts How to Backtest the Forex Carry Trade Strategy 3 Simple Ways to Develop Confidence in Trading Forex Backtesting Results: Simple Pin Bar System on AUDJPY How to Automatically Mark Trading Sessions When Backtesting. Comments David says February 10, at 4: Hey David, Yup, that is where Walter mentioned he got it from. I hear ya…coming soon. Hey Hugh, Some nice testing there mate, and I can confirm that in the wild this method works well also, as I have traded something along the same lines off hourlies and 4H charts for over 7 years. Happy trading Adam IamAdamJowett. Hey Adam, Very cool, thanks for the tips! Yet another thing to test… Cheers, Hugh. Leave a Reply Cancel reply Your email address will not be published. Get RSI Alerts Via Email or Mobile Click here to learn more. Academy Resources Products About Contact.
My Forex Strategy - A Simple Forex Strategy Using Just 2 EMA's
My Forex Strategy - A Simple Forex Strategy Using Just 2 EMA's
The brooding, vengeful, purpose driven (or clearly obsessed) Dark Knight is who Batman really is.
This is why they are often caught in traps set by scam, fraud and hoax companies.