I have found the one! After weeks of tinkering with the HLHB Trend-Catcher System’s rules, I have finally picked the set of forex rules that I will forward test for the next couple of weeks.
For those who are just tuning in, you should know that I was on a quest to find a more sustainable way to trade the Huck Loves Her Bucks the trend-catching mechanical trading system.
In its original rules, the 5 and 10 EMAs are applied to 1-hour charts and EMA crossover signals are filtered by the RSI indicator. Though it was crazy profitable (especially for GBP/USD) last year, it produced waaaay too many signals for my peace of mind. This is why I tried tweaking the rules a bit to see if I could get the same results but trade fewer signals.
Here are links if you want to catch up:
For those who are already up to date, here’s a summary of backtesting results for the past couple of weeks:
As you can see above, even the most profitable tweak still wasn’t able to replicate the fantastic results that we saw in 2016. None of the tweaks produced negative results, though, so I guess that’s something.
As for tweak #3, I found that lowering the ADX requirement exposed the system to a lot more fakeouts while still missing some key intraweek trends. Heck, I can probably could in my hands the number of times it actually negated an RSI crossover signal!
Which one tweak should I choose then? After weeks of doing backtests, I find that I really do prefer trading the 4-hour time frame. Trading the 1-hour charts just puts out way too many signals and requires too much effort for a mechanical system.
So, if I have to choose among the tweaks that I’ve made, I’m picking tweak #2. This is where I slap on the ADX (14) indicator on top of the RSI and use ADX > 25 as a filter. Though it doesn’t have the most impressive % gain, it tends to show higher win rates and average gain per trade. Well, maybe except for USD/JPY. But I’m not thinking much about that, mainly because I’m still “getting to know” the pair after focusing on EUR/USD and GBP/USD for so long.
What do you think? Should I push through with tweak #2 or should I stick to the original rules? Of course, if you have suggestions on how the HLHB System can catch trends, that would be awesome.
Oh, and don’t hesitate to share if you’re using other strategies/indicators to catch trends on the major dollar pairs!
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