Forex System Update: SMA Crossover Pullback (Dec. 14, 2015 – Jan. 1, 2016)

Greetings, forex earthlings! I thought I’d pick up where I left off with the SMA Crossover Pullback system signals from last year. If this is the first time you’re hearing about this mechanical system, better take a look at the trading rules and risk management adjustments first.

Here’s what went on in the past few weeks while I was vacationing in a galaxy far, far away…

To start off, let’s review the open forex positions from my previous system update. EUR/USD had a long position at 1.0880 and the trailing stop was activated once price moved 150 pips in the trade’s favor. This stop was eventually hit just before a new crossover materialized, which then led to another losing trade. Yipes!

EUR/USD 1-hour Forex Chart

EUR/USD 1-hour Forex Chart

EUR/JPY also had a long position open, which got closed on a new crossover. A stochastic pullback signal soon followed, generating a short position which also hit its trailing stop before the downtrend gained momentum.

EUR/JPY 1-hour Forex Chart

EUR/JPY 1-hour Forex Chart

Unfortunately for Cable, its long position eventually hit the full stop loss before a new crossover could even generate an early exit signal. It looks like the pair might have a strong comeback with the next short position, though.

GBP/USD 1-hour Forex Chart

GBP/USD 1-hour Forex Chart

AUD/USD managed to lock in a few pips when the trailing stop was hit before a short signal popped up.

AUD/USD 1-hour Forex Chart

AUD/USD 1-hour Forex Chart

Here’s a summary of the positions that were closed and left open as of January 1:

SMA Crossover Pullback Positions as of Jan. 1, 2016
Pair Position Entry SL PT Status P/L  (pips) P/L  (%)
EUR/USD Long 1.0880 1.0730 1.1180 Closed +30 0.20%
EUR/JPY Long 133.50 132.00 136.50 Closed -20 -0.13%
GBP/USD Long 1.5140 1.4990 1.5440 Closed -150 -1.00%
AUD/USD Short .7290 .7440 .6990 Closed +40 +0.27%
EUR/USD Short 1.0820 1.0970 1.0520 Closed -150 -1.00%
EUR/JPY Short 133.40 134.90 130.40 Closed +90 +0.60%
GBP/USD Short 1.4920 1.5070 1.4620 Open
EUR/USD Long 1.0915 1.0765 1.1215 Open
AUD/USD Long .7265 .7135 .7565 Open

Not really the strong finish I had been hoping for with the SMA Crossover Pullback system in 2015, but you gotta remember that this strategy still managed to lock a little over 10% during the latter half of the year. Even with this 160-pip loss or 1.06% dent on the account, it’s still a pretty solid gain!

Do you think this mechanical system would be able to take advantage of the strong forex trends we’ve been seeing these days? Looking forward to seeing your comments on this strategy!

  • Dane

    So I’ve implemented the SMA Crossover pull back system. I have a
    question regarding this. Soon as there is a crossover of the moving
    averages do you always look for a move in the stochastic? Is there a
    time out limit for instance. if i have a crossover and i haven’t found a
    stochastic move in the last x candles then look for another crossover?

    Any Help on this would be awesome.

    • Yep, I wait for a stochastic confirmation signal before entering a trade on a pullback, based of course on the direction of the SMA crossover. I haven’t implemented any time limits for now so the system just keeps hunting for either long or short pullback signals from the latest crossover.

      But now that you’ve mentioned it, I’m now considering adding a time limit to prevent the system from entering at the end of a trend or something. What do you think? Any suggestions on how many candles might be appropriate?

      • Dane

        Hey @disqus_mYALAgSROn:disqus

        this was the conundrum that I was having and i was thinking that I should just keep the system simple and as you said wait for the stochastic pull back signal. If you added other conditions then i think it may hamper the simplicity of the system.

        I guess if you would like you can have a simple and a more advanced implementation of strategy.

        • That’s true! I’m keeping the entry rules simple but I do agree that a few tweaks in implementation could help in improving the returns. Looking back I do think that there were a bunch of late signals at the end of trends that could’ve been avoided with a time limit on the stochastic pullback. Keep this in mind, I shall. Thanks for pointing it out!

          • Sparkers

            Will you make an EA available based on this system?

      • Ivan

        Hi Robopip, In my experience I have found bollinger bands channels to be good for monitoring overbought/oversold levels. Example Buy when Price is between deviation +1 and +2. Anything below +1 is too week of a move, anything above +2 is already overbough -> too late to enter.

  • Sparkers

    Will you make an EA available based on this system?

  • I beg to differ. I think short-term losses are unavoidable but it’s the longer-term consistent performance that matters. Are you speaking from experience?

  • Lee Spaziano

    I feel like any time somebody doesn’t know how to do something they say it can’t be done.

  • Lee Spaziano

    I think the system needs another Entry Caveat… Not sure what it is yet, but thinking about it.
    You want to filter out ranging and late trend entry.

    • Yeah looks like the latest batch of signals had another late trend entry. I probably gotta review the old charts to see what’s a good time limit for this pullback signal… Two, three days, what do you think?

  • Sparkers

    I guess no EA..lol oh well~

  • Sparkers

    Thanks for your reply..I guess it’s not available for mt4..I have used your system though and can’t resist taking profits after about 50 or so pips each time lol..works for me..keep it going~

    • Good to hear! I’ll work on one for MT4 once I find the time, been too busy catching the market moves these days. Are you still using this system lately?

      • Sparkers

        Yes I do..been watch EUR/JPY to do a cross over..just dancing right now~

        • Bahh yeah, same here. I’m still pretty bummed out that the system missed a huge part of that EURJPY selloff so I’m waiting for a fresh crossover, too.

  • It’s always good to look at the greats but it also makes sense to manage expectations. How has your performance been so far?

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