Q3 2015 Forex Performance: SMA Crossover Pullback System

Greetings, humans! As promised, I’ve compiled the trade results of the SMA Crossover Pullback mechanical forex system for Q3 2015 right here. Before that though, I’ve got a quick update on the positions for the past couple of weeks.

The long position on GBP/USD from the middle of last month hit its 150-pip stop just before a new crossover materialized.

GBP/USD 1-hour Forex Chart

GBP/USD 1-hour Forex Chart

EUR/USD had the same story, as the stop loss on the pair’s long position was hit right before a new crossover took place.

EUR/USD 1-hour Forex Chart

EUR/USD 1-hour Forex Chart

Fortunately for EUR/JPY, the downward crossover was made before price even reached the stop, reducing losses by a third.

EUR/JPY 1-hour Forex Chart

EUR/JPY 1-hour Forex Chart

Even better for AUD/USD, which had a new crossover just around the pair’s initial entry area, allowing the long position to get closed at breakeven.

AUD/USD 1-hour Forex Chart

AUD/USD 1-hour Forex Chart

New short signals popped up on these pairs last week but since these are still open, I decided not to include ’em yet in the stats for Q3 2015. Here’s a summary of the positions opened in the previous quarter:

SMA Crossover Pullback Forex System Trades

All in all, the system was able to chalk up 759 pips in gains, amounting to a 5.05% total gain (at 1% risk per position) for the quarter. Not bad, eh? Take a look at the rest of the stats:

SMA Crossover Pullback Forex System Stats

First, the good stuff. Most of the exits were made on new crossovers, which seem to be cutting losses for the positions before the pairs even reach the actual stop losses. Even though only five trades actually hit their targets, the average win is still nearly twice as much as the average loss, which is good for the strategy’s expectancy.

As for things that can be improved, I think this forex mechanical system needs a way to filter out those signals that take place during choppy or ranging market conditions. Maybe adding the ADX might help? Or will that mean too many technical indicators?

Another tweak that I’m considering adding is a trailing stop, possibly when the pair has already moved by 150 pips in the right direction. I’ve observed that there were a bunch of instances when pairs moved within in striking distance of the profit targets, only to retreat and make a new crossover. I’m thinking that adjusting the stop to entry after 150 pips then trailing it from there might limit the losses from these reversals or even enable the system to lock in a few gains. What do you guys think?

  • Granticus_Maximus

    I think that fundamentals can’t be ignored in companionship with the strategy. I let my technicals get the better of me over the last week and a half with the EUR/USD volatility. I had a number of entries get stopped out for only a minor profit. I re-evaluated and changed my stops in line with the fundamentals, which saved me when the USD crashed upon the jobs report – the pair slumped again and I’m back in a modestly profitable position again. I reckon the SMS crossover system could benefit from the occasional manual intervention based on major fundamental changes. The main issue with SMAs is that the delay on the result. Overall, if the system works long-term, then maybe changes or more indicators aren’t required?

    Wow, that was a lot more of a rant than I intended! My bad!

    • Haha, don’t worry about it! I get what you’re saying about fundamentals though, and I think the FX-men are able to properly incorporate those along with technical signals similar to what I get using this crossover system. As for me, well, my toolbox isn’t really equipped with discretionary methods so I’m counting on the technicals to reflect the fundamentals at some point. I’ll keep testing to see if it works long-term, thanks for sharing your thoughts!

  • Pingback: Risk Adjustments: SMA Crossover Pullback Forex System()

  • Interesting! I’ll look into this. Thanks for sharing your thoughts and for checking out my blog.