Constructing your individual buying and selling technique from scratch is troublesome. It’s loads simpler to discover a buying and selling technique that another person is buying and selling efficiently and tailor it to suit your character.
With that in thoughts, I at all times preserve my eye out for brand new buying and selling methods and take a look at them out to see in the event that they work or not.
I discovered this technique in a Kindle ebook and it appeared prefer it might work, so I gave it a take a look at. On this publish, I’ll present you the way the technique works, the testing plan that I created and the outcomes of my testing.
On the finish of this publish, I’ll present you potential upgrades to this technique and the place you possibly can see my further testing outcomes with this methodology.
The Buying and selling Technique Defined
This buying and selling technique comes from the ebook MT4/MT5 & TradingView Excessive Likelihood Foreign exchange Buying and selling Technique by Jim Brown. I don’t know Jim and I wasn’t paid to assessment this ebook.
This ebook was bought with my very own cash.
I really had this ebook in my Kindle library for a couple of yr 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.
After I lastly opened the ebook, the buying and selling methodology made sense and I learn the entire ebook in 1 sitting.
It’s a simple learn with respectable footage for 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 methodology, I gained’t go into the entire particulars.
You’ll have to purchase the ebook to get all of his buying and selling strategies, insider ideas and obtain the customized indicators that include the ebook. Nonetheless, I’ll present you adequate so you possibly can see what I did.
For those who like my outcomes, you get the ebook. If not, you possibly can search for one thing else.
On the upside, the fundamentals of the buying and selling technique are easy.
It’s made up of three transferring averages and a pair of momentum indicators. The strategy seems for modifications in momentum and marks the chart at factors the place you possibly can probably get in at turning factors.
As you’re a pattern chart, you possibly can in all probability inform that you should use the alerts in a few other ways. You possibly can both take trending trades or countertrend trades.
I made a decision to take development trades solely in my take a look at.
The Testing Plan
The beauty of this ebook is it reveals you some glorious entry strategies. On the draw back, it’s mild on exit methods.
In reality, there are not any exit methods.
Jim provides some ideas on how one can probably exit a commerce, however nothing concrete.
That’s one of many largest downsides of many in any other case helpful buying and selling books. They don’t offer you an entire buying and selling technique.
There might be many the reason why the writer selected not to do that. Perhaps his exits are primarily based on studying the market, as an alternative of getting set guidelines.
Nothing mistaken with that.
However from the standpoint of somebody studying the ebook and eager to learn to commerce, it leaves the reader hanging.
That’s why I’m sharing my outcomes right here.
Nonetheless, the ebook does offer you an amazing start line to create your individual technique.
The opposite draw back is that this ebook doesn’t offer you stats on the buying and selling methodology.
Once more, I get why authors try this. They don’t need to create expectations or get offended emails from readers who aren’t getting the precise similar outcomes as a consequence of a mess of causes that will take a couple of hours to diagnose.
Due to this fact, it was as much as me to give you my very own exit technique.
However the place to begin?
I’ve discovered that the simplest strategy to begin testing a buying and selling system that doesn’t have set exits is to make use of a 1X danger revenue goal. So if the cease loss is 100 pips, then the take revenue may also be 100 pips.
This gained’t work in all circumstances, but it surely’s a fast and soiled manner to assist me see if a technique has potential or not.
So right here’s the buying and selling plan that I put collectively to do my first backtest of the ideas on this ebook.
- Pair: EURUSD
- Timeframe: Day by day
- Threat per commerce: 1%
- Entry: Development trades solely. Watch for transferring averages to stack up so as. Quick to lengthy (prime 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 transferring averages. As soon as the transferring averages are stacked within the right order, I await a dot on the chart, whereas value bounces off one of many transferring averages. Crimson 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 danger
- Commerce administration: None, set and overlook.
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 way more after it hit the take revenue. I’ll get into extra about how I used to be in a position to make the most of these “further” strikes and enhance the output of this fundamental technique, later on this publish.
It’s an identical concept right here. Enter on the shut of a red-dot candle, when the transferring averages are lined up appropriately and value bounces off the brief, medium or lengthy transferring averages.
So I fired up TradingView and a spreadsheet to begin backtesting. This methodology takes a bit longer than utilizing Foreign exchange Tester, but it surely will get the job accomplished.
The info in TradingView goes again to 2003, so it’s sufficient to do a stable take a look at.
- Pair: EURUSD (each day)
- Trades: 84
- Win fee: 75.0%
- Complete 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 thirty days
If you wish to see the ideas in motion, watch this video.
I think about this a great take a look at.
The technique works.
A max drawdown of three% is superb.
However that is simply the start line. There is likely to be methods to extend the return of this technique.
If you wish to be taught the entire ideas and methods that Jim teaches, get the book here.
To get all of my future updates the place I take a look at new and probably extra worthwhile variations of this technique, join my private membership group here.