I’ve just finished crunching the numbers for the Inside Bar Momentum Strategy 2.0 and they’re looking pretty good. But did it fare better than my other mech system? Read on to find out!
If this is the first time you’re reading about the Inside Bar Momentum Strategy, I suggest you take a look at the system rules first.
ICYMI, I also applied stop loss adjustments to this quarter’s trades. I’m using 40% of the first candlestick’s length as basis for the stops compared to the original 20%.
And I know I haven’t really covered the position sizing rules for this system just yet but, for simplicity’s sake, I decided to assume 1% risk per trade in order to help me analyze performance.
From a total of 26 positions for Q3, more than half the trades turned out profitable. That’s a solid improvement from the earlier quarter’s 48% win rate and the previous version’s 33% win rate in Q1 2017!The average win at 1.14% is slightly lower than the earlier 1.25% average gain in Q2 while the average loss is capped, assuming 1% risk per position, even if price hits the full stop loss. In Q2, I wasn’t really feeling the large max drawdown of this pair compared to the maximum winning streak, but it seems to have made a stellar run in late August and September that it caught a seven-week rally.
Now here are the numbers for Guppy:
This pair keeps chalking up improvements in its win rate, from a 43% in the original version of the system to 47% in Q2 with risk adjustments. And now, the rate stands at 65.62% for a total of 374 pips or 14.56% in gains. That’s nearly twice as much as the Q2 profit of 7.60%!
Guppy was able to maintain a decent average win of 1.15% versus the average loss of 0.88% as most of the losing positions had to be closed early on new inside bar patterns before hitting their stops. The maximum winning streak is also loads better, more than making up for the average drawdown at 1.50% at the longest losing streak of two trades.
In a nutshell, both pairs were able to chalk up a really good performance for Q3 2017 even with relatively slow trends during the period. I guess what allowed the system to stay afloat was that it hops in and out of momentum plays very quickly instead of staying too long and getting hit by a sudden turnaround.