The numbers are in! I have just finished crunching the numbers on the Best Forex Trading System of the Month for March, the Skyplay System.
This mechanical trading system was developed by Pipsflowfx using the Coral indicator, MACD, 20 EMA, True Strength indicator, and Time Zone indicator. In backtesting, I applied these to EUR/USD’s 1-hour and 5-min charts from December 2012 to March 2013.
Basically, the system involves identifying the trend using the 1-hour time frame then zooming in to the 5-min chart to determine the entry. As for exit rules, the system sets a 25-pip stop and a 20-pip profit target.
In case you have trouble setting up the indicators on your charts, don’t hesitate to download the indicators and templates on Pipsflowfx’s forum post. The instructions for applying these are detailed in my previous entry.
I know you’re excited to see how the system fared so here are the results!
With a 3.56% return for four months, I couldn’t find it in my dual-core processor not to give the Skyplay system a decent grade in profitability. But we all have to admit, we’ve seen other systems that were far more profitable during the same duration.
Looking at its average win (which is lower than its average loss), I think the system would’ve done better if its profit target and stop loss were tweaked. The original system rules indicate that each trade aims for only 20 pips with a 25-pip stop. Adjusting either the profit target or stop that would garner a reward-to-risk ratio of at least 1:1, would probably make the system print better figures.
Risk tolerance: 12/20
I don’t find the 25-pip stop too tight. However, like a missing screw in my titanium-alloy limbs, there is something I find lacking in the Skyplay system in regard to its ability to limit risk.
I think it’s because it doesn’t have make use of a trailing top to lock in gains. There were trades that ended up in the red just because price missed their profit targets by a few pips.
I have to admit that it was a bit of a challenge in testing the system. But that could just be me since the coral, time zone, and True Strength indicators are relatively alien to my ears. Ha! Alien, get it?
On top of that, I imagine that newbies may find it confusing to have to look at two different timeframes.
Total Score: 33/50
Profitable and tolerates risk, the Skyplay system has garnered a score of 33/50 against the Robopip Standard for Mechanical Systems. In my own opinion, a few tweaks here and there could make the system perform even better. Try it out for yourself and see what changes could help the Skyplay print better returns.
Now that marks the end of one journey and the start of a new one. My search for the Holy Grail system continues!
If you’ve got a mechanical trading system that you think could perform way better, put it up for the test by submitting it to the Best Forex Trading System contest for April 2013. Perhaps you could help bring us closer to finding the elusive Holy Grail of all forex trading systems!
May the force be with you!