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After a bit of review, I gotta admit that this forex mechanical system still needs more work but I’m pleased with how I’m seeing a few improvements here and there. Before taking a look at the system’s grades, make sure you take a look at the rules and the testing results first:

Forex Rules: Triple SMA Crossover Version 2.0

Backtest Results (Nov. 1, 2013 – Nov. 1, 2014)

Forward Test Results (Nov. 1, 2014 – Nov. 20, 2014)

And now here are the grades based on my Framework for Forex Mechanical Systems:

Profitability: 8/20

With a few tweaks, the system ended up more profitable than the original Triple SMA Crossover system during the backtesting period. It was able to generate 5.03% in gains or a total of 1006 pips with a 50% win rate.

As with the original system though, a huge chunk of the total profit was just a result of a single good trade at the end of the backtesting period, right around the time the ECB announced its aggressive easing measures.

Risk Tolerance: 12/20

I think the system’s 200-pip trailing stop does a good job of cutting losses when a reversal is about to take place, but I do feel that an adjustment needs to be made for this risk management strategy. Instead of giving up all the wins when the trailing stop gets hit on a huge retracement or at the start of a reversal, I’m thinking of setting incremental profit targets to lock in pips along the way.

Newbie-Friendliness: 10/10

Even with all the tweaks, this system is still definitely newbie-friendly since the rules are straightforward and easy to implement. It simply makes use of basic technical indicators such as moving averages while entry and exit points are easy to understand.

Total Score: 30/50

Not that impressive but getting there! Your feedback definitely helped improve this system, as I incorporated your suggestions for the SMA parameters and using an indicator to filter out trades occurring during ranging market situations. Although the signals sometimes pop out late in the trend, the system still manages to catch a huge part of the move but it gives up most of the gains later on.

Any other recommendations for tweaks? Looking forward to seeing your feedback on this system!