1+3 Indicator triumphs over EUR/USD!

Last Updated: 29. Dezember 2023By

I have accomplished it! I have found a solution to the Forex market! It is logical that we wanted to use the 1+3 indicator not only against the DAX. If we have more values available for possible trades, we can also better respond to different market phases. We will not always get signals everywhere. The more flexible we are, the better our chances are.

Yesterday, I spent the day developing a system for EUR/USD. The result can be seen below. Today I have refined it further for the currency pair EUR/CHF.

For EUR/USD I can still stay in the 15-minute chart. With EUR/CHF that was simply not possible. Because the analysis revealed the following: A candle at a signal in the currency pairs must be at least 12 pips large so that I can set the stop loss sensibly.

However, EUR/CHF is a very laid back type and of course we sometimes get candles that are bigger than 12 pips – but not at the same time a signal. Therefore, I have extended the time unit to 30 minutes and lo and behold, it works again. At least the start looks good. Here I am still in the middle of the backtest.

Result of the backtest of EUR/USD in the 15-minute chart We had 16 trades of which 13 were won. If we stay with the 5 percent risk per position and thus 10 percent per signal, almost 7,000 euros would have been made from 1,000 euros after 3 months!

(Source: Excel)

The strategy I am using here is completely different from that of the DAX. What we can use there with pullback in Fibonacci zones does not work at all with the currency pairs. No chance!

So I waded through numerous signals and hoped that my brain would recognize some pattern and bring me to a sensible idea. I obviously had luck. Because the results of the backtests can be seen.

With the new strategy it’s simply about the fact that prices often start in one direction after a signal candle, only to turn around later and explode completely in the opposite direction. Basically left blink and turn right.

Qualifying for trades The trades now have to qualify themselves. In practice, this looks like this. After a signal candle, the prices must travel the same distance again in one direction. Let’s say the candle is 15 points big. Then the prices must rise at least 15 points above the high of the signal candle or fall 15 points below its low. Only then do I start painting in the chart and setting my entry, take profit and stop loss. That was the left blinker.

As you can see in the table above, we have fantastic CRVs again. A small profit is good 220 percent and thus directly compensates 2 losses. A big profit is at 600 percent and more! That’s what I meant above with „explode“. The prices make after a detour in the wrong direction and a little subsequent sideways phase often enough really far.

So far that I can choose the 4-fold candle size of the signal as the target point. And that even works with EUR/CHF, which usually does not overwork itself when it comes to movements. I currently have just 10 trades in my backtest table since the beginning of 2023. And I have only just arrived at February 2nd. The statement power is absolutely limited!

After we started with 3 losses in a row, the next 7 trades were successful. The fictitious account balance with 1,000 euros start-up capital is currently 2,829 euros with 5 percent risk.

I will also make a video in the next few days so that you can see exactly how the strategy looks like in practice. Then I will probably have more trades in the backtest and we will know more.

Thoughts in the end If the new strategy can really conquer EUR/USD and EUR/CHF, I would be surprised if we could not include even more currency pairs in the analysis. So we could probably come to at least 1-2 trades per week. No matter how the market is ticking at the moment.

Because if you looked closely above, EUR/USD behaved a bit strangely: 6 signals in October and then only one in November and December. I would like to have more alternatives in the future. And there is the one or other currency pair … Of the over 40 pairs that most brokers offer, we then simply take the ones that work best with our trading system.