Indicator update for currency pair GBPUSD

Last Updated: 4. Januar 2024By

The results are in. Yesterday I promised you a complete backtest from the year 2023. The success rate has, as expected, significantly decreased. It now stands at 52.38 percent. Out of 84 trades, 44 were successful. This is roughly what I hinted at and expected yesterday.

However, what I did not expect was a maximum drawdown of 52.70 percent if we continue to risk 5 percent of our portfolio in each trade. That is not sustainable. Despite the fact that we would have made a proud 7,867 euros out of 1,000 euros in the end, this speaks for the strategy, but it is not enough.

At 3 percent risk, the drawdown would still be 35.12 percent and the account balance would be 4,070 euros. One thing that I did not like: The trades were open for 1 to 2 weeks at times.

If we play this out in reality, this method blocks a lot of our capital. The idea is still to beat multiple underlying assets simultaneously. If 15 percent (3 trades) are already invested with just one signal in a currency pair, we reach our limit too quickly. This only hinders us.

Optimized strategy for more signals with less drawdown That is why I adjusted the strategy today. We are still in the research phase. That is why I do these backtests. This way, we can see what works and what doesn’t. The advantages of the new strategy: I am getting significantly more signals. There were already 25 signals in the first quarter of 2023. And we can still risk 5 percent. Because I now only open 1 position instead of 3.

This way, we simply pick the best zone for the trade and ignore the big fluctuations. At the same time, less capital is tied up in open trades. As a bonus, I also found a solution for small signal candles. Now we are speculating on a larger distance with more buffer at the same time.

This brings us back to the same profit as with a normal signal candle. So we let the 1+3 indicator do its work and if a smaller candle calls, we adjust the trade accordingly.

As a result, I expect a significantly lower drawdown, more stable portfolio growth, and more flexibility to also get a piece of the pie with other assets at the same time.

Trading is mostly psychology. I prefer to have a little less action and fluctuations, but constant growth in the portfolio. A 35 percent drawdown with 3 percent risk is also too much for anyone who wants to participate in copy trading. That’s where the fun stops. The fact that we can now also take smaller signal candles below 12.5 pips increases the profit even further.

Backtest 1+3 indicator GBP/USD until the end of April 2023 The new strategy is still so fresh that I haven’t been able to test everything yet until I send out my newsletter today. The plan is definitely working so far: Significantly less drawdown. We can still work with 5 percent risk. And look, we are already in a much better position than with the old strategy.

Currently, we have a profit of 4,024 euros. With the old strategy, we were at 2,425 euros profit at the end of April when risking 5 percent. This definitely looks better.

(Source: Excel)

One more important point: With the old strategy, we had a longer losing phase between March and April. From trade 28 to 45, only 2 were profitable. That is exactly how I can tell how crucial today’s update to the trading strategy was.

Without a detailed backtest and just using the numbers from yesterday’s Trading Insider, we would not have gotten the maximum out of it.

I am curious about the results of June and July. They were not good with the old method either. If we also conquer this market phase with the new strategy, I will give the green light.

By next week, I will hopefully have time to make a video for this trading system so that you can see exactly how I come up with these trades. By then, the new backtest will be ready.