This article has been translated from English to Gen Z Slang.
Aight fam, let’s get into the juicy deets: How much loot can each tech indicator snag solo?
Cuz like, forex traders don’t throw these fancy indicators on their charts just to flex, nah. They gotta be makin’ bank!
If these bad boys are spittin’ signals that don’t stack up them coins over time, then they ain’t it, chief!
So, we decided to show y’all how each tech indicator stacks up cuz sharing is caring. We ran backtests on these indicators for the past 5 years.
Backtesting is just a boujee way of saying we tested how these indicators would’ve hit up the markets in the past, no time travel required.
You’re gonna dig into this more in yo future studies, but for now, just peep the deets we used for our backtest.| Indicator | Parameters | Rules |
|---|---|---|
| Bollinger Bands | (30,2,2) | Slide in for a long position when the closing price dips below the lower band. Bail out and go short when it pops above the upper band. |
| MACD | (12,26,9) | Slide into a long move when MACD1 (fast) crosstab MACD2 (slow). Go short when MACD1 ducks under MACD2. |
| Parabolic SAR | (.02,.02,.2) | Join the long squad when the closing price crosses above ParSAR. Duck out and go short below ParSAR. |
| Stochastic | (14,3,3) | Slide in long when the Stoch % climbs over 20. Bail out short when it dips below 80. |
| RSI | (9) | Catch a long vibe when RSI pops over 30. Bounce out below 70 for short. |
| Ichimoku Kinko Hyo | (9,26,52,1) | Go long when the conversion line boss moves above baseline. Go short when it slips under. |
We applied these presets on the EUR/USD daily chart for the past 5 years, just chillin’ with 1 lot (yeah, that’s 100k units) at once, with no stop losses or TP points.
We’re coverin’ and switching positions as soon as a new signal hits. That means if we’re holding long and we get a sell signal, we cover and move to short.Also, we vibed like capital kings, startin' with ficitonal $100k as per our Leverage lesson wisdom.
Besides the cash money levels, peep this: total pips flipped and the biggest dip, aka max drawdown.
But heads up: we DO NOT SUGGEST trading forex like this with no stop losses. This is just for the lolz and learnin’. Check out our lit results:
| Strategy | Number of Trades | P/L in Pips | P/L in % | Max Drawdown |
|---|---|---|---|---|
| Buy And Hold | 1 | -3,416.66 | -3.42 | 25.44 |
| Bollinger Bands | 20 | -19,535.97 | -19.54 | 37.99 |
| MACD | 110 | 3,937.67 | 3.94 | 27.55 |
| Parabolic SAR | 128 | -9,746.29 | -9.75 | 21.96 |
| Stochastic | 74 | -20,716.40 | -20.72 | 30.64 |
| RSI | 8 | -18,716.69 | -18.72 | 34.57 |
| Ichimoku Kinko Hyo | 53 | 30,341.22 | 30.34 | 19.51 |
Peeped the tea, and over the past 5 years, the Ichimoku Kinko Hyo was the GOAT, performin' best solo with gains up in here.
Bagged a total of $30,341 or 30.35% profit. Over 5 years, that averages just a lil’ over 6% per year! 🎉Surprise cameo, the rest of the indicators were like, NOT busin', with the Stochastic indicator clinkin’ out a return of -20.72%.
The gang had major drawdowns chillin’ at a hefty 20% to 30%, yo.
But like, that doesn’t crown Ichimoku Kinko Hyo or toss all technical indicators in the irrelevant bin. It just means solo is meh.
Remember those epic martial arts flicks we simp over? Aside from The Rock’s hella cool People’s Elbow, no one just relied on one move to wipe the floor with baddies. The Rock whipped up a blend of moves to pwning town.
Forex trading, lowkey similar. It’s a vibe, and as traders, we gotta piece together and vibe checks the tools to unlock a script that’s gangbusters for us.
This leads us to the next banger: combining these indicators for major clout!