System Review: Amazing Crossover System

After tweaking the Amazing Crossover System into a more mechanized version and then backtesting its performance, it’s now time for me to reveal how it fared in the Robopip Standard for Mechanical Systems.

As I informed in my previous posts, I will be grading the mechanical systems based on profitability, risk tolerance, and newbie-friendliness. Basically, I’m just considering how profitable the system is, how much risk is involved in order to get those profits, and how easy the system is for non-experts in mechanical trading. Let’s get on with it, shall we, Earthlings?

Profitability: 10/20

As we saw in last week’s backtesting results, the Amazing Crossover System generated a profit of 13.79% from February to September this year. In fact, I kid you not when I tell you that except for the month of April, the system is consistent in churning out profits each month.

But be warned, human, for the system is not the trend catcher that it seems. Though the system is useful in keeping the losses at bay, it can also be too tight when it comes to letting its winners run. I have observed in my thinking pod that the trend could’ve caught some good price movements if not for the tight 20-pip trailing stop.

Risk Tolerance: 16/20

Even with an initial reward-to-risk ratio of only 1:1 in every trade, the system proves to be efficient in limiting losses. Again, this has something to do with the system’s tight 20-pip trailing stop.

I have also computed in my head that the system’s Sharpe ratio registers at 0.7090, a bit below my benchmark of 1.0000. This means that the human traders get a decent value in return for the extra risk that they’re risking, even if the rewards aren’t as attractive as the ones I usually see in my galaxy.

Newbie-Friendliness: 6/10

The system can be confusing at first, and it’s not just because it was designed by an Earthling. First of all, a trader needs to keep an eye out for both the EMA crossover and the RSI passing through the 50 level. In addition to that, some valid signals aren’t easy to identify, which could cause trouble for some newbies.

The system also requires traders to monitor new signals and price action carefully. Unless you are a robot like me who can stay awake 24/7, you have to find some way to make your cute little Earthling PCs alert you whenever a new crossover happens (so you can reverse your position) or when your trade goes 20 pips in your direction (so you can move your stop).

For newbie-friendliness, I, the great Robopip, gives the Amazing Crossover System 6 points.

Total Score: 33/50

All in all, the system gets 33 points. I gave it an additional bonus point since I believe it is very easy to tweak if market conditions change. I must say that I am impressed with the system, but sadly, it is still not the Holy Grail that we are looking for.

Nevertheless, the system has a lot of potential. It could be turned into an Expert Advisor, or EA, so that it scould be run automatically. If you want, you could also tweak it further to filter out the fakeouts.

That’s it for me this week, humans! I’m off to Big Pippin‘s “crib” to learn about the difference between an “afro” and a “Mohawk,” but drop me a line anytime if you have any questions!

Holy grail system. Find you, I must!

  • Daniel

    I have been looking at this system for the last 2 weeks. I don’t recommend swing trading this bad boy, but to only take entries in the direction of the larger trend. For instance, if you want to trade the 1hr charts, only trade in the direction of the 4hr trend, or 15m and 1hr etc. A nice 4hr move can last a few days and you can definitely catch a few 1hr entries in its direction.  I would not use such a tight 20p stop. How about using a stop below the last low of the ABCD swing, C being the pullback low in an uptrend – thereby locking in profit and taking more entries as the price moves up. Also maybe enter with 2 lots. The first lot profit target covers your risk and the second lot profit target is at 2-10 times your risk. I would consider swing trading this system in a well defined side ways consolidation structure, otherwise you might catch many false entries that will eat your profit when you eventually catch a big swing. My 2 cents

  • pip

     …some valid signals aren’t easy to identify,..pls explain what are they?

    • robopip

      Identifying an EMA crossover is easy enough, but there are times when the RSI crossing over the 50 mark isn’t clearly seen and needs close attention.

  • Marketing Automation

    With this system, sometimes the EMAs crossover occurs but the robot can’t enter till the RSI indicator confirm.

  • Matthew

    This is one of the systems I personally use and it’s been fairly successful, but I’ve made a few modifications to the rules.

    1) I don’t use a trailing stop

    2) I use one time frame higher to generate trade closing signals, so I don’t get stopped out on short term retracements on the lower time frame. For example, if I open the trade on a 1hr chart I will monitor it on a 2hr chart and close the trade if there is a crossover on the 2hr chart in the opposite direction of my entry.

    3) I will close the trade manually if it hits a major support level and looks to reverse

    4) I use a MACD indicator with quicker settings than my actual MA’s, so it gives a little lead time on the signal. I will sometimes enter before the actual signal if there is a confluence of factors suggesting my direction and timing are right. An example would be if a EUR/USD just traded up to a trendline resistance and bounced off with a bullish reversal candlestick pattern.

    5) like Daniel suggests, I only trade in the direction of the larger trend. This makes a HUGE difference in profitability.