Lo and behold, dear humans! I’ve got the grades for The Trend Is Your Friend mechanical forex system based on my framework for mechanical systems. But before we get to that, I must require you to read these posts first:
And now, here are the grades!
For the 12-month backtesting period until April 2014, the system was able to generate a 6% gain when applied to EUR/USD’s 4-hour time frame. It ended up with less than 50% for its win ratio but the 2:1 return-on-risk for every trade improved the system’s expectancy.
It didn’t give any valid trade signals for the same pair and time frame for the forward testing period in May, but I got a sell signal when I applied the rules to the 1-hour chart and got a 2% return. Based on the feedback I got when I published the backtest results, the mechanical system can still be reworked to generate more trade signals.
Risk Tolerance: 15/20
The system’s risk management rules were pretty straightforward, and I was impressed with how the reversal candlesticks requirement filtered out what could’ve been losing trades. The backtest results showed a 4% drawdown though, which I think is relatively large considering the overall gain was at 6%.
For newbie-friendliness, I thought that this mechanical system deserves a perfect 10 because the rules are very easy to understand and implement. Of course I did make a few tweaks to mechanize the stop loss and profit targets for backtesting purposes, but I imagine that a beginner trader would have absolutely no problem with making adjustments to these.
Total Score: 40/50
All in all, the Trend is Your Friend mechanical system by donnapinciotti got a total score of 40. Pretty good in my book! Check out how this system fared using different tweaks in my past reviews:
Which set of mechanical system rules do you think works better? Any other tweaks you’d like to try out? Make sure you keep me posted on how your system testing results turn out!
The search for the Holy Grail continues!