System Review: London Statistical Breakout System

Salutations, dear earthlings!

It is I, Robopip, back from my pod. After crunching the numbers of pipcompounder’s London Statistical Breakout System, I have come up with a summary of my backtesting results.

But before I get ahead of myself, I would like to start with a couple of disclaimers. First, remember that I have mechanized pipcompounder’s original system as I found the original parameters a bit too discretionary for a robot. And so, the results I have come up with could be significantly different from those of the original system.

You can check out the changes I implemented in backtesting the system in my previous post. Also note that your backtest results might differ from mine due to difference in price feeds.

Waste time, we must not, humans! Here are the backtesting results of pipcompunder’s London Statistical Breakout System for August 8 – September 28, 2012:

LSBS.png

Profitability: 14/20

There is no question that the London Statistical Breakout System is profitable. Over the course of 8 weeks, it has incurred a net win of 13.50% which translates to 269 pips. The system’s win rate is also commendable. Statistics show that more than half of the total signals that materialized closed as winners.

However, looking at its average win/loss ratio in pips at 1.99, I find that the system could be tweaked further to become more profitable. Perhaps making use of bigger profit targets could improve this. But unless I test out this theory, I will give the system 14 cogs for profitability.

Risk Tolerance: 16/20

I have awarded the mechanized London Statistical Breakout System a fairly favorable grade in terms of its ability to tolerate risk.

The system’s losses only average 0.56% which is less than half of its average win at 1.30% per trade. For the most part, the 20-pip trailing stop limited its losses but still allowed for the system to catch the trends that materialized at the wake of the London session.

I did not grant pipcompounder’s mechanized system a perfect score because I think that it still has a lot of room for improvement.

For instance, fakeouts can still be limited especially on short trades. The system would have had fewer losses if sell stops had a 3-pip buffer similar to long entries.

Newbie-friendliness: 10/10

I’m going out of my robotic limb and say that the London Statistical Breakout System is the simplest system I have backtested by far. For that, I have given it the full 10 points for newbie-friendliness.

It doesn’t include any indicator, its rules are very easy to understand, it’s relatively easy to code into an EA, and one doesn’t have to be in front of the computer all day to trade it!

The only thing you really need to know is when the London open is. If you’re not sure about it, I can zap the information directly to ingrain it into your brain or you can head on over to the Trading Sessions section in the School of Pipsology to review it.

Total Score: 40/50

Examining the profitability, risk tolerance, and newbie-friendliness, the mechanized London Statistical Breakout System has earned a score of 40/50. It’s one of the highest-scoring systems by far so I urge you, Earthlings, to try it out on a demo account.

But I am sorry to say that I have yet to find the Holy Grail of forex trading systems.

Perhaps you know of it? Share your trading with me as well as the rest of the world by joining October’s Best Forex Trading System contest! You still have time to submit your entries before I return next week to announce the contenders. Just read the contest rules and regulations and who knows, it could be your very own system that I will be backtesting next time around!

That’s it for now, my human friends. This is Robopip, signing off.

*Beep beep boo beep*

3 comments

  1. Christinaa

    Can you please explain your exiting.

    Both long and short trades will have a 20-pip trailing stop and two profit targets: 20 and 40 pips.

    How are you exiting with 2 profit targets pls explain?

    Reply
  2. semajio

    I am very skeptical of this system, and I have traded london breakouts extensively. The entry points should be based on a fraction of the range of the previous h1 candles in Asian session, a 20 pip stop and 50 pip TP is sufficient to give about 1:3 R/R. Only one position per session should be entered. Backtesting yields great results on EU only.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>