The forex trading quarter is over and the numbers have been crunched! Here’s how the trend-catcher did on EUR/USD, GBP/USD, and USD/JPY in the last three months.
But first, read all about my HLHB Trend Catcher System if this is your first time hearing about it.
Basically, I’m catching trends whenever the 5 EMA crosses above or below the 10 EMA. A trade is only valid if RSI crosses above or below the 50.00 mark when the signal pops up. And in this version, I’m adding ADX>25 to weed out the fakeouts.
As for stops, I’ll continue to use a 150-pip trailing stop and a profit target of 400 pips. This might change in the future, but I’ll stick to this one for now.
Oh, and as mentioned recently, I’ve switched back to applying the HLHB system to the 1-hour time frame. Using 4-hour in Q1 2017 and Q2 2017 wasn’t bad, but I think using this trend-catcher on the 1-hour could yield better results.
Here’s what came up after crunching the numbers in Q3 2017:
First of all, remember that we only started using the HLHB on the 1-hour time frames in September. This means that Q3 2017’s numbers are a mix of back and forward test results. Oh, and take note that I’m comparing Q3’s numbers against all of H1 2017 that I got from my previous backtests!
Anyway, we can see early on that EUR/USD and GBP/USD’s numbers are far from what was advertised in the backtests. In fact, I think this is the first time in all of my back and forward tests this year that the pairs have seen negative yields!
One simple explanation is that both Fiber and Cable saw relatively tight ranges throughout the quarter. I mean sure they moved by a couple of hundred pips, but these moves usually happen within days and not hours.
USD/JPY, on the other hand, has been as good to the HLHB trend-catcher as it was in the previous backtest. Between threats of a nuclear war with North Korea, tax reform talks, and speculations on the Fed’s next rate hike, there’s no shortage of catalysts for the pair!
One thing I’ve noticed when I was pulling the numbers is that using the ADX>25 criteria took out A LOT of fakeouts, but it still managed to invalidate a couple of strong intraweek trends. I might do a little tweaking on this to see if raising or lowering it would yield better results.
Next is using my 150-pip SL, 400-pip PT on the 1-hour chart. As in the ADX it did help filter fakeouts. However, there were more times when the HLHB lost majority (if not all) of its profits just because the pair rarely move by more than 150-pips on the 1-hour before seeing some major retracement. Think I should tighten my stops a bit for better locking in of gains?
Overall, the numbers are not as good as previous results, but not surprising either given Q3 2017’s existing market themes and the current parameters. Are you spotting any tweaks I can make to the current system?
Don’t hesitate to share your thoughts or ask me questions if you have any!