41.62 percent – the result after 3.5 months of backtesting!
I have simplified the self-programmed 1+6 indicator. At the end of September we had a phase in which it delivered many false signals. That was a difficult sideways phase – a trading system rarely wins there. Nevertheless, I wanted to simplify the structure a bit and generate a few less signals.
Because honestly, I don’t have to trade every day. I can also wait a week or 2. If the signals are more profitable in the end, it is not only much more relaxed, but also more fun.
At the moment I am using a simpler version of the indicator now based on one indicator and only 3 qualifying indicators. From 1+6 to 1+3. But I’m still testing it in the 15-minute chart in the DAX .
What has now caught my attention, however: It works at first glance also with other values. The 1+6 was apparently too much tailored to the M15 in the DAX .
Backtest analysis since 1.9.23 Here you can see all 29 trades that the 1+3 indicator delivered to us . For a first test I checked it like this. Immediate entry after a signal. As a stop loss I took the low or high of the last 3 candles in the 15-minute chart.
Each position was opened with two trades. One with CRV 1:1 and one with target 2:1. These were my ideas for a first attempt. I will show you the result in my Excel table.
(Source: Excel)
So we are blindly trading according to signal. We don’t pay attention to any other circumstances, look for better entries and get a maximum CRV of 2:1 out. Oh, what I forgot to mention: As soon as the prices reach the CRV of 1:1 and the 1st trade is won, I move the stop loss of trade 2 to break even. So we either win 200 percent on trade number 2 or at least don’t make a loss.
Analysis of the analysis You can read a lot out of such a backtest and also what we can optimize. That’s what it’s all about. Let’s start with the result: We won 55.17 percent of the trades. At the end there was a cumulative profit of 41.62 percent – after 3.5 months. That looks promising.
For each position I used 3 percent of my fictitious capital. That means 6 percent is risked with every signal. 3 percent for the CRV of 1:1 and 3 percent for the CRV of 2:1.
So this is also enough for us if we only win 55 percent of the trades to be more than 41 percent in the plus at the end.
So, now the conclusion. What immediately caught my eye: If a trade reached the CRV of 1:1, it often also ran into the 2:1. Of the 29 signals and thus 58 trades there were only 4 cases in which only the CRV of 1:1 was reached. If that is the rule, we can also do without it and always aim directly for 2:1. We don’t leave so much money lying around.
I also noted that we would have reached a CRV of 10:1 twice. A long signal came before a long upward movement in both cases. 5 times we would have reached a CRV of 3:1.
Some trades were also in the middle of the night. I could never have traded them live. But I also included them. Just like, for example, short trades just above a support zone, which makes no sense logically.
Conclusion Despite the fact that we have not yet optimized the trading system, it is already profitable. The maximum drawdown of just under 22 percent can certainly be improved with fewer trades and a direct target of 2:1. Just like the consideration before each entry whether we are at important resistances or supports.
Blindly taking something about the maximum of the last 3 candles as a stop loss is not entirely wrong either. But that can also be improved with the right rules. For a version 1.0 of this system I am quite satisfied after the first backtest.