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I’m definitely seeing a few improvements on the tweaked version of the Triple SMA Crossover, but that’s just based on these yearly backtest results. For one, the addition of the ADX was able to filter out the crossovers occurring during ranging market environments, leading to fewer valid signals but with a better win ratio.

triple sma crossover trades

All in all, the forex mechanical system generated 1006 pips for a total of 5.03% (assuming 1% risk per position with an initial 200-pip stop). Using a trailing stop allowed the Triple SMA Crossover Version 2.0 to minimize losses in the event of a reversal, but I’m thinking of adding another rule to make the system lock in some profits along the way instead of giving it all back when a correction takes place.

Anyway, here are the metrics based on the backtests:

triple sma crossover backtestJust as in the original mechanical system, the profits were mostly a result of a single good trade that was taken around the time the ECB started its easing spree. I did observe that there were a bunch of other strong trends that the system caught but it wound up returning most of the gains on a pullback. Do you think I should add a 200-pip profit target and maybe start trailing the stop only when price has already advanced 200 pips in the trade’s favor?

I don’t want to give up on this forex system just yet since it could still deliver promising results with a few more adjustments. Let me know if you have any recommendations!