Greetings, earthlings! As promised, I compiled the results of the tests I’ve conducted on eight mechanical forex systems so far this year. But before we get to the numbers, let’s have a recap of these trading systems:
This simple mechanical system is part of the Hall of Fame of past winners in one of the contests I’ve conducted a few years back. It makes use of two basic technical indicators: EMA (100) and RSI (9). A 100-pip target and a 50-pip stop are used in applying the system on EUR/USD’s 1-hour time frame.
This is another part of the Hall of Fame of Past Winners. The mechanical system rules are based on the MACD and stochastic indicators applied on the 4-hour chart of EUR/USD. This one might be a little complicated for newbies as it requires a strong knowledge of divergences!
This forex mechanical system focuses on the 5 and 10 EMA crossovers, with the RSI for confirmation. It can be applied on EUR/USD’s 1-hour forex time frame using a 50-100 pip target and an initial 100 pip stop, which would switch to a 20-pip trailing stop.
A few adjustments were made on the original system to yield another version, which makes use of the parabolic SAR indicator for profit targets. These rules were applied on EUR/USD’s 4-hour time frame to see if the system can also work on longer-term trades.
Another batch of tweaks were applied on the original Amazing Crossover system, yielding a third version that has a wider 50-pip trailing stop to accommodate larger price pullbacks.
This mechanical trading system incorporates three simple moving averages (50, 100, 200) that must line up in descending or ascending order to generate a sell or buy signal. The stop loss was based on EUR/USD’s weekly ATR of 150 pips.
Revisions to the original system yielded a second version, which makes use of shorter-term SMAs to generate more crossovers and the addition of the ADX to filter out signals occurring in ranging market situations. The trailing stop was also adjusted to 200 pips to give the pair more leeway in making corrections.
In the third version of the Triple SMA Crossover System, a profit target was added to help the system lock in profits as the trend progresses instead of giving all the pips back when the 200-pip trailing stop is hit.
And now here are the numbers…
From the looks of it, the Amazing Crossover System variations outpaced the rest of the pack with more than 20% in gains for the yearly backtests and the highest monthly forward test profits. Of course, keep in mind that strong trends took place in the past few months, to the benefit of trend-following forex systems.
Are you planning on making use of these forex mechanical systems in your trading strategy?