1+3 Indicator vs. USD/JPY and GBP/USD The 1+3 indicator refers to the comparison between the US dollar/Japanese yen (USD/JPY) and the British pound/US dollar (GBP/USD) currency pairs. This indicator is used to analyze and predict the relative strength and performance of these two currency pairs in the foreign exchange market. It is an important tool for traders and investors to make informed decisions about their investments.

Last Updated: 3. Januar 2024By

I have found my master! I cannot find a strategy for the currency pair USD/JPY that allows us to use the 1+3 indicator. The prices are jumping too frequently in both directions, so I had to give up hope in the 30-minute chart. My goal is to continue to be as flexible as possible, so that we can conquer not only the DAX and EUR/USD. Fortunately, the currency pair GBP/USD is looking good again!

It’s quite interesting. When we look at the currency market, EUR/USD is in the lead with 28 percent of the trade. 13 percent goes to USD/JPY and 11 percent to GBP/USD. Although the latter two are quite close to each other, the prices behave completely differently.

Difference between EUR/USD and GBP/USD However, with GBP/USD, I also did not make any progress with the strategy I use for EUR/USD. But today I have developed a suitable one and I am happy to share the previous backtest with you. Here, too, there are large movements after a signal and here, too, we wait for a breakout in one direction before we bet on a return in the opposite direction. Quasi like with EUR/USD – just different.

I have remained true to my line, so that I only become active in the 30-minute chart with signal candles over 12.5 pips. This is definitely identical to the EUR/USD strategy. With GBP/USD, instead of opening 2×2 positions, I open 3 at once. Therefore, I have reduced the risk per trade to 3 percent, after all, we are immediately involved with 9 percent in the market with each signal. This is almost comparable to 2×5 percent.

Here is the result from January to mid-February 2023. Not many trades yet, but enough for a first impression. I spent more time developing the new system today, so I will follow up with the complete backtest tomorrow.

We already had 24 trades in the first 7 weeks of 2023. That’s definitely nice when something happens more often. One thing in advance – the trades often reach their target, but sometimes it takes several days and once even 2 weeks. That’s why I don’t adjust the stop loss here. You have to mentally withstand that the positions sometimes run back to zero before they (hopefully) shoot to the target. If the complete backtest changes something about it, I will of course adjust accordingly.

83.33 percent win rate is pretty good! 1,000 euros of risk capital have already turned into 2,939 euros after 7 weeks. The maximum drawdown is fantastic so far: 5.76 percent. We could therefore risk more, but let’s wait for the final result. With 5 percent risk per position and thus 15 percent risk per signal, we would stand at 5,497 euros with a drawdown of 9.36 percent.

(Source: Excel)

If you look closely, all 3 trades always have the same stop loss. Only the take profits are different. Ultimately, this results in 3 possible outcomes – apart from total loss:

The price only reaches the 1st take profit before we are stopped out: then the result is a loss of 64 percent of our stake.

The price reaches the 2nd TP and we are then stopped out: then we make about 260 percent profit. Of course, this always depends on one pip more or less in the order.

The price reaches all 3 TP: then we collect around 700 percent return. In my backtest table you can see that this has happened in most cases so far.

Conclusion A good start to the year 2023 with this backtest. This could also mean a good start for us in 2024. We don’t need the 83.33 percent win rate here either. We could probably live with a lot less than 50 percent, as long as we occasionally hit the holy trinity of take profits. I’m curious to see how the final result for 2023 turns out. You can read about it directly here tomorrow instead of the usual Friday.

The post 1+3 indicator vs. USD/JPY and GBP/USD appeared first on Investor Verlag.