Hello, forex friends!
As you may notice from my feed, I’m trying to look at possible ways to tweak the HLHB System’s parameters from 2016 so that I could get the same fantastic results without having to log in bajillions of signals.
I think I’m on to something here.
In my first tweak, I used the same SMA and RSI settings but applied them on the 4-hour time frame instead of the 1-hour charts. I also extended my stop loss limits and profit targets. They ended up being profitable, but the 18-month backtest profits were waaaaay lower than 2016 results.
My second tweak was a little bit better. I basically just added an ADX (14) filter to my tweak #1 rules. Win rates and average pips per win shot up, but were still short of the overall gains that we saw in 2016.
This time around, I’m looking to ease my ADX filter a little. See, I only traded signals that had ADX > 25 and noticed that there were one or two (or twenty) invalidated signals that would’ve yielded serious moolah. In addition, I also read that some traders are comfortable using lower ADX filters, thinking that the ADX hitting 20 or 25 might be too late for a trend catcher.
So, next week I’ll be using tweak #2 with a lower ADX filter in my backtest. As usual, I’ll be doing covering 18 months (6 trading quarters) from Q3 2015 to Q4 2016.
Wish me luck!
USD/JPY’s Backtest Results
Thank goodness for trend-catching fans out there!
As some of you have mentioned, I have yet to post USD/JPY’s backtest results for my previous tweaks. After all, I have pinky sworn to add the major dollar pair to my HLHB ways this year.
This one’s for you, friends!
Unlike in EUR/USD and GBP/USD, USD/JPY’s results actually plummeted when I added the ADX (14). Sure, signals were halved and average pips per winning trade inched higher, but profits barely hit 26% of the first tweak. Heck, even win rate suffered!
One possible explanation is that there were a lot of legit trends during the period that got filtered out by the ADX filter. One more reason to relax my ADX requirements, don’t you think?
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