After two weeks of testing, the result of the HLHB Version 3.0 backtest is finally in. If you read the title carefully, you’d know that it’s no good!
Without further ado, here are the details:
The HLHB System Backtest Results (2009 to 2010)
• Total Gain/Loss: -3.86%
• Total Number of Trades: 90
• Number of Winning trades: 29
• Number of Losing Trades: 61
• Win %: 32.22%
• Loss %: 67.78%
• Largest winning trade (pips): 819
• Largest losing trade (pips): -300
• Longest winning streak: 3
• Longest losing streak: 8
What I like:
The 20-pip filter is FREAKING AMAZING! It helped me avoid fakeouts and kept me in A LOT of losing trades.
The system also generated a lot of signals, which allows the law of averages actually happen. That’s a good thing if the system is actually profitable.
When the system wins, it wins a lot. According to my backtesting, it can bring in 600-800 pips if you are able to catch a true trend reversal.
What I don’t like:
The RSI sucks. Not only did it prevent me from taking winning trades, it also did not help keeping me out of trend reversal fakeouts! If I didn’t use it, the system would actually have been profitable. Heck! It made me miss a 1000-pip move in 2010!
Also, the amount of losing trades is too big and the losing streaks are long. It confirms that the trade catches a lot of fakeouts.
The system is still far from being the Holy Grail of mechanical systems, but I think it has potential. I just need to tweak a few things and then backtest it again. I’ll do a bit more research on possible indicators that I can use so I can up my winning percentage and actually make the system profitable.