Yet another newbie system!

[sr2]

Hi all

Hope you are having plenty of success in your trading.

I am a newbie to trading and would like to share my system with you and hopefully get lots of feedback. Basically I tested this on paper using Metatrader as I am not proficient enough to code Metatrader to back test automatically, so if anyone can help with that I would greatly appreciate it.

The system is very simple, which I think for a newbie is a good option. There are a few issues with the system such as drawdown and timescale as you will see, but having said that the profits can be quite good and you do not have to sit at the PC all day long.

The system is basically using 4 hour charts with 10ema and 40ema crossover with Parabolic SAR (0.02, 0.2).

1) Wait for fast MA to cross slow MA
2) Wait for PSAR to touch or crossover the slowMA from below for a buy or above for a sell (hope thats clear)
3) If the fast MA is less than 100pips (still experimenting with this) away from the slow MA you have a trade signal

(see attached image)

I use a stop loss of between 50 and 100 depending on the volatility of the currency pair. I start moving my trailing stop up as the profit goes over a 100. But like any kind of trading I use my own judgement too. The nice thing is you do not need to watch the trades all day long. You can just put them in and leave them if you like, using a stop loss of 50 and a take profit of 100-150 and check every 4 hours if there are any new trades.

Manual backtesting has produced the following results (from January 2004 up to and including July 2004). Unfortunately due to personal circumstances I was unable to continue testing and would ideally like to complete the study using Metatrader. Also as this was manual backtesting there maybe some errors:

GBPUSD
======
4 trades
4 winners
0 losers

Total pips: 1416


AUDUSD
======
7 traders
5 winners
2 losers

Total pips: 852

EURUSD
======
8 trades
6 winners
2 losers

Total pips: 674

USDJPY
======
10 trades
6 winners
4 losers

Total pips: 1145

USDCAD
======
10 trades
6 winners
4 losers

Total pips: 747

GBPCHF (needs more testing)
======
6 trades
3 winners
3 losers

Total pips: 3199

EURGBP
======
11 trades
2 winners
9 losers

Total pips: -224


Total trades: 56 trades
Total Winners: 32 winners
Total losers: 24 losers

Total pips: 7809

As you can see there are not that many trades in the year which I think is quite good as it means you can do other things instead of having to sit at the PC all day long. This is a longer term trading system.

Any comments, suggestions or queries are welcome.

Thanks for reading and apologies for the really long post.

ps. please note as I mentioned in a later post in this thread. The MAs are exponential MAs not weighted as stated above.

[TrendlineBreak]

System looks fairly sound at first glance, only thing you will need to be careful of is the fact that the testing period (Jan-Jun 04) has been the best time to trade in the past 5 years, nice strong moves, if you look at some other posts where systems have been tested they all do well in that period.

I suggested a system called SIBKIS that other traders are still working with, this gave excellent results as well in that period but would have performed only just above average in 2003 with high drawdowns.

Not saying your ideas won't work, and the use of 4 hour charts is good, but you just need to see how it would have performed in say 2003.

[sr2]

Many thanks for your feedback TrendlineBreak...truly appreciated.

I did actually start looking at 2003. The two currencies I completed were profitale. I just wanted to have pretty accurate results with MT. I will try to code something but I wouldn't hold your breath ;-) I'm hoping some MT guru will knock something up for me in 5 mins!

[Jetheat]

This one is quit similar to the PSAR Crossover system I posted in "Trading Methods and Strategies".
Take a look. It may give you some more ideas?

JH

[sr2]

Thanks JH will do

[sr2]

Hi

After starting this thread I tried to complete coding this in MT4 but without success. I haven't given up. Anyway I decided to demo trade this system this month and have posted the results thus far. The results are very good. Obviously it is only for 1 month and the true test of any system is to see how it performs over a considerably longer period. I will continue to test the system along with some of the others I am currently trying out. If the system proves to be successful in Feb then I will start a small live account trading the system.

You will see from the results that the target was not hit on most occassions. This was not because the system did not achieve the results it was because I felt the market was stalling and so decided to bail out and thereby breaking the rule "let your profits run." I will try to be stricter in future.

A good feature of the system is that I did not need to be glued to the PC. I set my SL and TP and went off to do other things. If I was sitting at the PC I watched the trades and that is usually when I decided to bail out early.

Anyway just wanted to share with you in case someone can use this to make some money

SR2

[tim_nn]

This looks rather interesting, sr2.

Well done with it so far and thank you for posting it.

Could I ask a couple of questions (three, actually)?

1. What made you use WMA's rather than EMA's for this system?

2. What proportion of the time, overall, is it "in the market", i.e. with an open position?

3. Do you think it might be viable to relate your figure of 100 (for the maximum difference between the two WMA's at the point of the crossover of the PAR and the long MA, I mean) to the ATR of each pair, rather than taking it as a flat 100 for all currency pairs?

(I agree entirely with TLB's comments above, also).

[Skorpion]

Thanks for sharing. Appreciate people who openly share their systems. Good luck with it.