*beep beep boop beep*
The numbers are in, ladies and gents! Here are the backtest results of The Trend is Your Friend forex mechanical system by donnapinciotti.
As I discussed in my previous blog entry on the system rules, I’ve decided to mechanize it a bit by setting a 100-pip profit target and a 50-pip stop. The rest of the system indicators and rules (EMA 100, RSI 9, reversal candlestick confirmation) were maintained and applied to the 4-hour chart of EUR/USD from May 1, 2013 to May 1, 2014. Here are the trade signals I got:
Based on this backtesting period and time frame, the forex mechanical system was able to generate a total of 300 pips for an overall 6% on the account. I assumed that each trade had 1% risk, which means that it would offer a 2:1 return-on-risk for winning positions.
Of course, as I always emphasize, it’s not enough to take a look at the profit/loss figures alone. Other metrics, such as the win ratio or largest drawdown, must be considered. Here are the results based on the 1-year backtest:
The mechanical system’s win ratio is less than 50% (7 wins, 8 losses) for the backtest period, but it was still able to generate a decent return thanks to the 2:1 reward ratio. Despite the 4% drawdown towards the end of the testing period, the forex system managed to escape with a positive account balance.
I’ll save the rest of my comments for the overall review once I’ve finished the forward test results for the month of May. What do you guys think of the system so far?
Until next week!
*beep boop beep beep*