System Review: Simple System32

Although I am still new to the culture of humanoids, I understand the concept of promises well enough to keep mine. As I promised last week, I give you my verdict on the Simple System32 based on the Robopip Standard for Mechanical Systems.

Profitability: 4/20

I apologize for my heartlessness, but with a measly 2% return for eight months, I do not think of myself mean to give out such a low grade for the Simple System32. The stats speak for themselves. From March to October 2011, only two signals materialized. That is even less than the number of dates that Huck has been on in the past 8 months.

However, I do acknowledge that both trades ended up as winners. I award two points to each trade. After all, they could have been so much worse.

Risk Tolerance: 4/20

As I said, because the only two trades that materialized ended up as winners, Simple System32 does not register any drawdown. However, churning out the numbers for the Sharpe ratio based on the two samples, my processor came up with -0.1730.

That is light years away from my benchmark of 1.0000! And so, I am afraid I cannot grant the system a score worthy of a Holy Grail. However, I find it in my high-tech multi-core processor to award a few points to Simple System32 for its rules on risk management.

I have pointed out System32′s conditions for exiting trades and I see that they allow the system to make the most out of trends. The primary problem though was that valid signals materialize as seldom as Halley’s comet passes your planet Earth.

Newbie-Friendliness: 5/10

Although the concept behind the system is pretty easy to grasp, I would not really describe it as simple.

For one, in System32′s thread, we see multiple moving averages in the charts. However, the purpose of which were not explained. Also, I imagine that the Bollinger Bands and moving averages applied to Stochastic made some human brains timeout.

There are just way too many indicators included in the system. I may be from another galaxy, but I am also believer in K.I.S.S. – “Keep it simple, silly.”

Total Score: 13/50

I have come to the conclusion that the Simple System32 is not as simple as its name implies and it does not generate as many signals as the Holy Grail system should.

Nevertheless, I still believe that the system has potential. The biggest flaw I believe is the lack of trading signals, which I believe stems from using a 100-SMA.

For now, I shall retreat back into my pod and backtest the system again using a 50-SMA instead. I think that by applying a moving average of a shorter period, the system will be able to generate more signals.

Stay tuned to the backtest results which I will release at the end of the week!

  • Mattwhitepaint

    Hi Robopip,

    what backtesting software do you use?

    thanks

  • shaqywacky

    More dates than I went on… :C

    • huck

      *Giggle*

  • how to trade forex

    I think  that the system has a lot of potential and will be able to generate more signals.

  • vincejg327

    I have been working on this system as well and I am sad to say that it is not the Holy Grail. Not even a tea cup. The principles are sound but the execution needs to be worked out better.

  • CoolnCalm

    Robopip, I am scratching my head here… the System32 template and indicators are giving me signals timely and profitably (140pips on EU thus far this week!). Is it possible that it does not use the 50SMA at all in triggering  
    signals (which will then mean that the automated system has a wrong setup and it is thus unfair to rate the system so poorly)?
     

    • huck

      Here are the settings that Robopip used in his test: link to babypips.com

      He used the 100 SMA in his testing, so maybe that’s where the discrepancies lie. Robopip indicated that he’ll do a 50 SMA test too though!

  • Waltons

    I’m really digging the blog so far, great work! Are you coding up the systems as EAs in MT4 and back testing? Any plans to release code if so?