I missed a couple of my evening shows and stayed up late to back test my system… I’m pretty sure I’ll be making coffee like a zombie at work tomorrow but I think my sacrifices were well worth it as I finally got to see the HLHB System in action! I’ve got the raw data here in my computer but you can take a look at the summary below to see the results.
The HLHB System Back Test Results (Oct 2006 to Oct 2009)
- Total Number of Trades: 76
- Number of Winning trades: 42
- Number of Losing Trades: 34
- Win %: 55.26%
- Loss %: 44.74%
- Largest winning trade (pips): 150
- Largest losing trade (pips): -275
- Average winning trade (pips): 140.29
- Average losing trade (pips): -90.09
- Longest winning streak: 7
- Longest losing streak: 9
- Largest drawdown (pips): -398
- Average drawdown (pips): -35.89
- Average Days In Trade: 4.28
TOTAL PIP PROFIT/LOSS IN THREE YEARS TIME: 2829
If I risked 1% of my account every 150 pips (roughly 0.0067% per pip), I would have had an 18.95% return on my capital in the span of three years. If I convert this into an annual rate, I would end up getting a 6.32% return on investment per year.
In my opinion, this is too low considering the innate risk that comes along with forex trading. If this is the case then I’d rather put my money in a relatively safer time deposit account that yields 5% p.a.
Anyway, while I was back testing my system, like one of my readers pointed out, I have observed that my profit target was too tight. There were many opportunities where I could have locked in 200, 300, 400 pips, but my trade was no longer open because my profit target was already hit! In addition to this, I also noticed that my largest losing trade was a whopping 275 pips while my largest winning trade was a measly 150 pip. I think putting a limit maximum pip stop loss seems ideal even if my average pip loss only stood at 90 pips.
Thus, the two major changes that I’ll be doing are:
- My stop cannot exceed 150 pips.
- I will be trading two positions (while keeping within my 1% risk limit). Once my 150 pip profit target is hit, I will put a 150 pip trailing stop on my second position to enable me to ride the trend and create a risk free trade.
You can check out the HLHB system here.
What do you guys think? Changes for the better or changes for the worst?