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A new month is already underway. So, how did the two Variants of the Happy Hunter fare during the sixth month of forward testing?

Well, go ahead and click on the relevant jump links below for the deets.

And if you need to look at the trade details, you can find them by clicking on the relevant links below:

Okay, time for the actual evaluation!

This Month’s Final Results

Equity Curve Comparison (July 2-31)
Equity Curve Comparison (July 2-31)

This Month’s Verdict

July was the worst ever month for the (not so) Happy Hunter Trading System, with the Fixed TP Variant down by 2.98% for the month, while the Trailing Variant suffered a more painful 3.62% loss.

The losses incurred in July also effectively erased the gains harvested back in June.

But despite the painful month of July, both Variants are still actually in positive territory.

As you can see below, the Fixed TP Variant is still up by 6.75%, which is kinda sad since it was up by an impressive 9.73% back in June (note: returns already take spread into account).

The Trailing Variant, meanwhile, is dangerously close to entering negative territory since it’s now only up by 1.09% for the entire forward testing period. It was up by a more respectable 4.70% back in June.

What makes July’s performance even more vexing is that both Variants were actually well in the green at one point since the Fixed TP Variant had a high water mark of 3.72%, while the Trailing Variant was up by as much as 6.20%.

However, the system went into a very painful losing streak and never quite recovered. So, what happened? Well, this happened.

GBP/NZD: 1-Hour Forex Chart
GBP/NZD: 1-Hour Forex Chart

The system happily raked in gains when trading conditions were relatively favorable during the first 13 days of the month. However, the last nine days were incredibly unfavorable, with abnormally low volatility and very choppy, sideways price action.

Basically, the same trading conditions that the trading system had to to go through during the early days of May, as well as the last week of June, especially the two terrible days on  June 26 and June 28, which wiped out around 5% worth of gains from both Variants.

And again, the system was designed on the assumption that GBP/NZD would exhibit historically “normal” trading conditions. However, trading conditions (so far) have been anything but normal.

A picture is supposedly worth a thousand words, so here’s a chart to show y’all what I’m talking about.

GBP/NZD: Daily Forex Chart
GBP/NZD: Daily Forex Chart

Looking at that daily chart of GBP/NZD above, it looks like things could get even worse since GBP/NZD’s price action has been consolidating tighter and tighter into an ascending triangle pattern. It would be nice if the triangle breaks and we get a volatility boost this month, but I’m not keeping my hopes up.

Getting back on topic, the abnormally low volatility meant that ATRH also became very low, which made it hard for the system to recover from losses because, as regular readers already know, the system’s true enemy is the 12-pip fixed spread, which stays constant even as the ATRH evaporates.

And to show y’all that the system’s design is sound and that the system’s true enemy is spread (and to lift our wounded spirits), here’s how the system would have fared under a fantasy zero-spread environment.

Equity Curve Comparison (July 2-31) In a Zero-Spread Environment
Equity Curve Comparison (July 2-31) In a Zero-Spread Environment
Performance In a Zero-Spread Environment
Performance In a Zero-Spread Environment

Anyhow, I’ve ranted for a bit, so let’s gt back to the actual verdict. And as a refresher, here are the main goals I laid down for the system when I first laid down my plans in My 2018 Trading Resolution way back in January.

  1. My peak-to-trough drawdown must not exceed 20%
  2. My reward-to-risk ratio must be at 1:1 or better
  3. I must open at least one new trade per day
  4. No losing year (Easy Mode)
  5. No losing month (Normal Mode)

And here are my bonus goals (some are obvious jokes).

  1. A win rate of 50% or better
  2. No losing week (Hard Mode)
  3. No losing day (Harder Than Hard Mode )
  4. No losing hour (This Is A Joke Mode)
  5. No losing minute (Holy Grail Mode)
  6. No losing second (Delusional Fantasy Mode)

Again, monthly growth targets are not listed in my goals since the system is still in the forward-testing phase.

Okay, time to give the verdict.

Both variants did not exceed the 20% drawdown threshold, so both Variants obviously met that goals. In fact, both Variants have never breached the 10% “panic level” during the six months of forward testing.

However, the Trailing Variant almost did since it had a max drawdown of 9.26% in July. That’s still way above the 20% drawdown threshold, though, so I’ll give it a pass.

With regard to the goal to have a reward-to-risk ratio of 1:1 or better, I’ll just skip that as usual, since that’s not really applicable since the Trailing Variant has no set TP while the Fixed TP Variant has a reward-to-risk ratio that is inherently less than 1:1 because of the relatively large 12-pip spread.

However, it’s worth pointing out that both Variants failed for the first time to meet my bonus goal of having a win rate that’s above 50%, which just goes to show just how terrible trading conditions during the July period were.

As for the third goal, there was at least one trade per day in July, so we can easily check the third goal off our list.

As for the fourth goal, that’s still in progress and we won’t know until next year. But as mentioned earlier, both systems are still in the green for the year so far, so we will probably meet this goal. Well, I’m not really too sure if the Trailing Variant will be in the green by next year, but it’s still in the green for now, so I’ll give it a pass.

As for the fifth goal to have a winning month (each month, every month), well both Variant obviously messed up on that one.

Despite the poor performance in July, both Variants are still actually meeting my critical goals, well, except for the goal to have a winning month every month. There’s still room for improvement, though, and that’s what I’ll be talking about next.

Going Forward

I mentioned last time that aside from addressing the Fixed TP Variant’s poor reward-to-risk ratio, I also wanted to reduce the system’s vulnerability to choppy, sideways price action with limited volatility.

Well, I’ve been testing some ideas out last month and there have been some promising signs. However, I’m not done testing yet, so I won’t be able to roll out Version 5.0.

I’ll try to wrap things up in two weeks, but if I can’t do it, then I’ll just release the original Version 5.0, which only include the rules that will finally fix the the Fixed TP Variant’s poor reward-to-risk ratio. The system still went into a losing streak under those rules, though.

Anyhow, I’ll then release the tweaks meant to protect the system from unfavorable trading conditions as Version 6.0 maybe next month (or whenever I complete it).

Also, do note that the planned Version 5.0 (or Version 6.0) would change the system’s nature.

As it currently stands, the Happy Hunter Trading System can be classified as a pure price action, momentum-based, mechanical system. However, the rules which show the most promise involve using technical indicators to filter out some trades, so the system would no longer be a pure price action system. Also, the system is still a momentum-based system, but it also has aspects of a mean reversion system. Anyway, you’ll see what I mean once I release it.

Okay, that’s enough for today. It’s back to the daily updates tomorrow. And as always, I enjoy your feedback. So if you have any questions, or if you just want to say “hi” then don’t be shy and write a comment down below!

Cheers!

Happy