I am currently trading the currency pair EUR/GBP with the 1+3 indicator. It has been quite resistant, at least in the tested 30-minute chart. However, I have identified a pattern that we can use with a trading system. Unfortunately, I was not pleased with the drawdown. Let me give you the data.

The success rate was 62.5 percent. In the end, we had a profit of 70.77 percent in 2023 with 5 percent risk per trade. However, the drawdown was catastrophic: 22 percent. This may seem harmless in the end, as we still ended the year in the positive. But 6 consecutive losing trades did not look sexy.

If we already have this in the backtest, it leaves room for improvement in the coming years. And I would rather take fewer trades and be in the positive more often. This is how the result looked in the chart: Successful trades are marked in blue, losses in red.

EUR/GBP in the 30-minute chart before optimization Here you can see a snapshot of the spring and summer months in the chart. Despite this poor phase, we were still able to end the year with a profit of 70 percent.

(Source: Tradingview.com)

We can illustrate this nicely with markings. You can see the long and short signals in the chart through the green and red signals. Signals without a colored line were not used. This is usually because the candle is less than 7 pips, which would be too tight with the distances of the take profit and stop loss.

How to not only test but also optimize a trading system After the backtest for 2023, I had a positive end result. The strategy worked. However, there is still an important thing to improve: the drawdown. That’s why I adjusted the indicator slightly for this currency pair. The goal was to filter out the signals of the red markings while keeping as many signals as possible at blue lines in the chart.

Of course, this did not happen immediately. I had to try out a whole series of ideas until I got the desired end result. The solution was to cross the EMAs 34, 55 and 100 as an additional indicator. In addition, all indicators must now be in agreement within 2 trading candles instead of 3. The new chart in the same time frame looked like this afterwards. I was able to eliminate many signals that had previously given us red lines.

(Source: Tradingview.com)

In the end, we now have fewer trades. Interestingly, the success rate is still at 62.5 percent and the total profit has decreased by 2 percentage points to 68.88 percent. However, we have a drawdown of an amazing 5 percent.

This means that we have never had more than 1 loss in a row. Of course, this is not a guarantee for the future, but it is a 1000 times better basis than the first version with 6 consecutive losses. It may not be very exciting to have only 16 trades in a year with these settings, but we do not have to dance on all high horses at the same time. Less is more.

I would rather have a handful of currency pairs with stable trading systems. This can then be a lot of fun at the end of the year.