A Proven Simple Strategy (2MAs, 1 RSI)
Hi everyone, it's been a while since I've posted, but I wanted to share a super simple system that has proven to be profitable. I hope this helps some of you FFs out there. I didn't develop this strategy and it's nothing new. It's often overlooked because it's so simple, but often the simplest strategies can be the best. I made some modifications to the original trading rules to make them more suitable for my trading style.
Disclaimer: This is not the Holy Grail. I'm not saying this is a holy grail. It's just a system that works, nothing more.
Things to remember:
1. Aim to trade on the daily charts. I will also post results for other time frames at the bottom of the post (coming soon).
2. This system has no hard stop loss or take profit. I have not found any setup that uses ATR or similar tools to place stops and take profits to improve the system. So I don't use the system and just follow the signals.
3. This system is not perfect. Like all systems, it performs better on certain pairs under certain conditions. What really allows you to take advantage of the system and avoid this discrepancy is to diversify the instruments you trade!
4. The test results use a fixed batch size that does not increase.
5. Tested on 7 major USD currency pairs (EU, GU, AU, NU, UJ, UCHF, UCAD).
Thread rules:
1. Don’t add additional indicators. If you wish, you can adjust the current indicator settings and share your results.
2. If you are going to recommend changes to the system, provide solid evidence to support why these changes would be profitable or better.
3. Be friendly. Please don't send spam.
4. Again, no one likes guessing. Please do not post statements or claims here about this or any other system without providing evidence for the claims you make.
5. Have fun and keep learning!
Entry rules:
long:
1. The price is above 200MA.
2. The price is below 5MA.
3. RSI(2) is below 5.
short:
1. The price is below 200MA.
2. Price is above 5 MA.
3. RSI(2) is above 95.
Exit rules:
Option 1 (this option is for people who just want to see the chart at the end of the day, this is the option used in the results below):
Exit at the close of the candle that touches 5 Ma.
Option 2 (a better option for those who want to watch trades like a hawk):
Once the price hits 5 Ma, exit.
As they say, the proof is in the pudding. Well, that’s my pudding, and everyone else’s pudding.
pudding:
Homemade Pudding:
The first puddings I showed you were mine. Although there are other studies done about this system which I will share below, it is always smart to test the system for yourself before you even think about using it.
EURUSD Daily Jan 2010 - Dec 2015 - Fixed 0.10 lots - Spread = Current (tested during New York session)
summary:
P/L: 290.00
Profit coefficient: 1.10
Expected return: 3.92
Maximum DD: 8.35%
GBP/USD Daily Jan 2010 - Dec 2015 - Fixed 0.10 lots - Spread = Current (tested during New York session)
summary:
P/L: 923.80
Profit coefficient: 1.31
Expected return: 9.15
Maximum DD: 6.71%
AUD/USD Daily Jan 2010 - Dec 2015 - Fixed 0.10 lots - Spread = Current (tested during New York session)
summary:
P/L: 459.10
Profit coefficient: 1.20
Expected return: 5.28
Maximum DD: 8.62%
NZDUSD Daily Jan 2010 - Dec 2015 - Fixed 0.10 lots - Spread = Current (tested during New York session)
summary:
P/L: (132.70)
Profit coefficient: 0.95
Expected return: (1.37)
Maximum DD: 4.23%
USDJPY Daily Jan 2010 - Dec 2015 - Fixed .10 Lots - Spread = Current(Tests ran during NY Session)
summary:
P/L: 2200.83
Profit coefficient: 2.57
Expected return: 21.57
Maximum DD: 2.63%
USDCHF Daily Jan 2010 - Dec 2015 - Fixed .10 Lots - Spread = Current(Tests ran during NY Session)
summary:
P/L: 61.42
Profit coefficient: 1.02
Expected return: 0.65
Maximum DD: 6.86%
USDCAD Daily Jan 2010 - Dec 2015 - Fixed .10 Lots - Spread = Current(Tests ran during NY Session)
summary:
P/L: 80.29
Profit coefficient: 1.04
Expected return: 0.80
Maximum DD: 5.90%
Overall results
P/L: 3882.74(38.82%)
Average profit coefficient: 1.31
Average expected return: 5.71
Average maximum DD: 6.19%
summary:
Overall this system performed quite well over the last 5 years. As I mentioned above it is key to diversify when using this strategy or others like it because some pairs will perform others as market conditions change. Diversifying will combat this variance as shown in the results above.
Outsourced pudding:
summary:
As you can also see from these results, diversifying really helps this system by reducing the natural variance that will occur between individual pair performance.
Disclaimer: This is not the Holy Grail. I'm not saying this is a holy grail. It's just a system that works, nothing more.
Things to remember:
1. Aim to trade on the daily charts. I will also post results for other time frames at the bottom of the post (coming soon).
2. This system has no hard stop loss or take profit. I have not found any setup that uses ATR or similar tools to place stops and take profits to improve the system. So I don't use the system and just follow the signals.
3. This system is not perfect. Like all systems, it performs better on certain pairs under certain conditions. What really allows you to take advantage of the system and avoid this discrepancy is to diversify the instruments you trade!
4. The test results use a fixed batch size that does not increase.
5. Tested on 7 major USD currency pairs (EU, GU, AU, NU, UJ, UCHF, UCAD).
Thread rules:
1. Don’t add additional indicators. If you wish, you can adjust the current indicator settings and share your results.
2. If you are going to recommend changes to the system, provide solid evidence to support why these changes would be profitable or better.
3. Be friendly. Please don't send spam.
4. Again, no one likes guessing. Please do not post statements or claims here about this or any other system without providing evidence for the claims you make.
5. Have fun and keep learning!
Entry rules:
long:
1. The price is above 200MA.
2. The price is below 5MA.
3. RSI(2) is below 5.
short:
1. The price is below 200MA.
2. Price is above 5 MA.
3. RSI(2) is above 95.
Exit rules:
Option 1 (this option is for people who just want to see the chart at the end of the day, this is the option used in the results below):
Exit at the close of the candle that touches 5 Ma.
Option 2 (a better option for those who want to watch trades like a hawk):
Once the price hits 5 Ma, exit.
As they say, the proof is in the pudding. Well, that’s my pudding, and everyone else’s pudding.
pudding:
Homemade Pudding:
The first puddings I showed you were mine. Although there are other studies done about this system which I will share below, it is always smart to test the system for yourself before you even think about using it.
EURUSD Daily Jan 2010 - Dec 2015 - Fixed 0.10 lots - Spread = Current (tested during New York session)
summary:
P/L: 290.00
Profit coefficient: 1.10
Expected return: 3.92
Maximum DD: 8.35%
GBP/USD Daily Jan 2010 - Dec 2015 - Fixed 0.10 lots - Spread = Current (tested during New York session)
summary:
P/L: 923.80
Profit coefficient: 1.31
Expected return: 9.15
Maximum DD: 6.71%
AUD/USD Daily Jan 2010 - Dec 2015 - Fixed 0.10 lots - Spread = Current (tested during New York session)
summary:
P/L: 459.10
Profit coefficient: 1.20
Expected return: 5.28
Maximum DD: 8.62%
NZDUSD Daily Jan 2010 - Dec 2015 - Fixed 0.10 lots - Spread = Current (tested during New York session)
summary:
P/L: (132.70)
Profit coefficient: 0.95
Expected return: (1.37)
Maximum DD: 4.23%
USDJPY Daily Jan 2010 - Dec 2015 - Fixed .10 Lots - Spread = Current(Tests ran during NY Session)
summary:
P/L: 2200.83
Profit coefficient: 2.57
Expected return: 21.57
Maximum DD: 2.63%
USDCHF Daily Jan 2010 - Dec 2015 - Fixed .10 Lots - Spread = Current(Tests ran during NY Session)
summary:
P/L: 61.42
Profit coefficient: 1.02
Expected return: 0.65
Maximum DD: 6.86%
USDCAD Daily Jan 2010 - Dec 2015 - Fixed .10 Lots - Spread = Current(Tests ran during NY Session)
summary:
P/L: 80.29
Profit coefficient: 1.04
Expected return: 0.80
Maximum DD: 5.90%
Overall results
P/L: 3882.74(38.82%)
Average profit coefficient: 1.31
Average expected return: 5.71
Average maximum DD: 6.19%
summary:
Overall this system performed quite well over the last 5 years. As I mentioned above it is key to diversify when using this strategy or others like it because some pairs will perform others as market conditions change. Diversifying will combat this variance as shown in the results above.
Outsourced pudding:
summary:
As you can also see from these results, diversifying really helps this system by reducing the natural variance that will occur between individual pair performance.
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