WOW! 1+3 indicator in complete backtest with EUR/USD from 2023!

Last Updated: 2. Januar 2024By

I was curious. The 1+3 indicator had made a good first impression in the EUR/CHF 30-minute chart. So why not test the trading strategy in the EUR/USD 30-minute chart as well? There, data is available for the entire year of 2023, not just the months of October to December. Thought and done.

Aside from that, I started the new year with a 48 hour fast after watching a video about how good it is for the body. Autophagy and all that. So I didn’t spend any time eating, I could also do a detailed backtest.

This finally brings us to a more interesting number of trades. What I had looked at so far sounded good in terms of results โ€“ but it wasn’t informative enough.

Now I have actually been able to collect 75 trades in the currency pair EUR/USD in the 30-minute chart. And as usual, I counted close decisions as losses and didn’t make anything look pretty. I want to have the most realistic result and if I get stopped out in practice because of 1 or 2 pips, my broker doesn’t give me anything either. So it’s better to calculate slightly negative. If we still end up in the plus at the end, everything is fine.

2023 Backtest 1+3 Indicator in the 30-minute chart Out of the 75 trades, 53.33 percent were successful! Here, the ratio finally dropped to a realistic level and is still strong. Because our average risk-reward ratio is 3.46, if we had risked the same amount on each trade! You may already have an idea of โ€‹โ€‹what this is leading to…

If we continue to use the trading system with a very sporty 5 percent risk per trade, we will have a drawdown of 23.05 percent this time. So the portfolio has fallen by a maximum of this amount from its respective all-time high. We had a nearly a quarter in the red after 5 consecutive losing trades. The year itself ended with a drawdown of 21.52 percent.

(Source: Excel)

As you can see, this method turned 1,000 euros into 44,651 euros by the end of the year! If I hadn’t been so strict with the backtest, there would be an even crazier value there. The portfolio’s all-time high was actually at 55,479 euros.

The strategy in detail I’ll just make a video about it in the next few days. That’s the best way for me to explain how it works exactly. Ultimately, the length of the signal candle determines everything. We wait for the prices to move away from the length of the signal candle and then expect a pullback.

As soon as it is clear in which direction the simple length was reached first, we aim for the counter-movement. That’s what I meant by „indicating left and turning right“. The first two trades start at the high of the signal candle (if the first movement was upwards). We then start 2 shorts as soon as the prices fall back into the range of the signal candle.

Our target is the 3-fold length of the signal candle. The stop loss is once good half of a signal candle and for the 2nd trade the SL is just above a signal candle length.

The next two trades start as soon as the prices have shot 50 percent of the length above the signal candle on the other side and thus confirm the reversal. My target is then the point that reflects the 4-fold signal candle downwards. If the candle is 15 pips, my target is 60 points below the candle.

For the first stop loss we take the lower area of โ€‹โ€‹the signal candle (for a short) and the 2nd SL is the upper area of โ€‹โ€‹the signal candle. In practice โ€“ and also in the backtest โ€“ I always planned a few points buffer . So never started the trade exactly on the lines, but always left a little room. The same with the SLs and TPs.

It was interesting to see in the backtest how often the prices ran into the take profit, which was 4 times the length of the candle. Unfortunately, sometimes only after I was stopped out โ€“ but that’s part of it.

One topic is still trailing the SL. I have currently decided to adjust the stops in the interest of a lower drawdown. This means that I have missed at least two 600 percent returns, but I think it is more sensible in the long run. The system also works quite well this way.

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