"The trader against the coin" trading system

Message
Author
FX Helper
Posts: 1170
Joined: Mon Apr 01, 2013 3:55 am

"The trader against the coin" trading system

#1 Postby FX Helper » Tue Jan 12, 2016 10:51 am

In the "10 free simple strategies" file, which you received after purchasing the Forex Tester’s license, a simple trading system called "The trader against the Coin» (#7) has been described. We decided to create an expert advisor and test this strategy for you on 12 years of high-quality tick data.

Why this strategy is of interest?

Given that mastering Forex trading is an extremely difficult activity, many traders have resorted to strategies based solely on money management techniques. To put it simple, there are no indicators and no technical analysis involved in the money management trading systems. All strategy is based entirely on stop Loss, take profit, and lot size. We believe that every trader is interested to answer the following question: "Is it possible to trade profitably in the Forex market without having even the slightest idea of how the foreign exchange market works?"

Description of the strategy
1 candlestick (bar) = 1 order regardless of the time frame.
The order should be opened randomly at the opening price of the candle.

Example
Bar #1 opens at a price of 1.3230. An expert advisor opens a buy order (simply because this type of orders was randomly chosen by the software). Stop loss is equal to the predefined value from 30 to 100 with a step of 5 (30, 35, 40, ... 90, 95, 100). No take profit is used at all. The order will be closed automatically either by stop loss or at the opening price of the next candlestick (bar #2).

Bar #2 opens at a price of 1.3252. An expert advisor opens a sell order (again, the selection is made randomly) with a stop loss and without any take profit. Closing of the transaction occurs either by stop loss or at the opening price of the next candlestick (bar #3).

Testing results

Table1.png
Table1.png (11.78 KiB) Viewed 1178 times


Since trades are opened randomly, a trader should pay a special attention to the fact that the test results on the same currency pair, time frame, data sample, and broker at the same stop loss will be different every time.

Example
We started testing this strategy with a fixed stop loss of 50 points. In the first test, we received the overall result of 674 pips on 12 years of historical data. In the second test, the outcome was equal to 2,641 pips whereas the third test provided us with a -224 pips (negative). On this occasion, our main task is to conduct the test for each stop loss value for at least 10 times, and select the value, in which all 10 experiments had a positive and yet substantial results.

Daily Time Frame*

Table2.png
Table2.png (54.92 KiB) Viewed 1178 times


*The more detailed statistics is available here:
D1.zip
(76.51 KiB) Downloaded 49 times


Please note that the size of the stop loss is given for the data with 5 digits after the decimal point (3 digits for the pairs that contain the yen). 200 points in the table are equal to 20 pips.
Among all variations of stop loss, only 4 options showed positive results in all 10 cases: 30, 35, 40, 55 pips.

Table3.png
Table3.png (5.35 KiB) Viewed 1178 times


The stop loss of 55 pips is the winner on the daily time frame.
The result in 5,338 pips for 12 years is 445 pips a year.

Pros
If your initial deposit is $1,000 and you use the 0.02 lot (20 cents for a price change in 1 pip), the stop loss’ amount of 55 pips will bring you:
$445 * 0.2 = $89 or 8.9%

Cons
Despite the fact that in 10 cases out of 10, we got a positive result, it was likely that with a larger sample we could receive a negative result. In this regard, although this strategy belongs to profitable ones, it is a quite risky one as well.

Weekly Time Frame*

Table4.png
Table4.png (59.3 KiB) Viewed 1178 times


* All detailed statistics is available here:
W1.zip
(94.96 KiB) Downloaded 43 times


Of all the 17 variations, only one gave a positive result in all 10 tests – the one with the stop loss of 70 pips. The average result was equal to 2,725 pips over 12 years (227 pips a year on average).

Pros
With the initial deposit of $1000 and with a stop loss of 0.02 (20 cents for a price change by 1 pip), the stop loss of 70 pips brings the following:
$227 * 0.2 = $45 or 4.5%

Cons
In cases with stop losses of 50, 65 and 85 pips, a negative result was displayed in one test. Therefore, the use of these parameters is quite dangerous for your deposit. Using of all other variations on a live account is even less reasonable because of the results instability.

Monthly Time Frame*

Table5.png
Table5.png (57.12 KiB) Viewed 1178 times


* All detailed statistics is available here:
M1.zip
(94.65 KiB) Downloaded 43 times


Pros
None

Cons
Using this trading system on monthly time frames is very dangerous. Even the best result that was equal to 2,309 pips with stop loss of 100 pips twice led to the losses in the long run.
We prove our point we decided to double check the monthly time frame

The summary table on the net profit can be downloaded here:
Total.zip
(14.23 KiB) Downloaded 41 times


Conclusion
The riskiness of this strategy is obvious. Because of the accidental orders opening, one can never get the same result, even when using the same parameters.
If you agree to take risks and believe in the profitability of this trading system, then you should pay special attention to its use on the daily time frames with a stop loss of 55 pips. Most likely, you will make a profit of 8.9% of the deposit each year.

Disclaimer
Forex Tester Software, Inc. is not responsible of your potential profits or losses. We test the strategies on Forex Tester and provide you with the statistics received on historical data. The decision to either use our results or dismiss it is completely up to you.

Norm
Posts: 1
Joined: Thu Jan 21, 2016 4:39 pm

Re: "The trader against the coin" trading system

#2 Postby Norm » Wed Jul 19, 2017 3:07 pm

Hello FX Helper, or Anyone,

Thank you, so much, for the post!

It would be tremendous is you could post results for other pairs besides EURUSD. Will you kindly do that??

Thank you,
Norm


Return to “Closed Forum”

Who is online

Users browsing this forum: No registered users and 1 guest