Looking on a naked chart, can you pick the best egy?
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Thread: Looking on a naked chart, can you pick the best egy?

  1. #1
    I'd love to share with You a intriguing idea I once developed myself and still using quite frequently.

    Try to take a look on a chart with no additional indior - just pure candlesticks.
    Likely it is hard even for experienced traders to tell what really will happen in the long run when seeing only the pubs.

    But let's take this more simple! . Seeking a chart. Are You able to guess which egy worked best during the time you're taking a look at?
    Starting from point A and ending at B.

    What was the best egy to exchange?

    First take a look on a chart like this one

    it is about 640 pubs on EURUSD H1 chart.

    To to not think too much let's attempt to pick 1 of 3 predefined simple egies with no MM:

    1. Bollinger band [15,1] - trades are taken across the BB (brief when previously, long when below)
    2. Moving average [25, close] - extended trades are taken when shut above MA, brief are taken when shut below MA
    3. RSI [15] - trades are taken across RSI 45 and 55. After last RSI closed below 45 proceed long, when last closed over 55 go brief

    Only these 3 to get a beginning.
    I'll show You the way to simply have a wonderful insight into this without programming each EA and backtesting it in egy tester.
    The tool I want to share with You've even greater power in certain aspects, as it gives to a trader type of a function F(x) in which F() is an overall cumulative profitability of a egy and x variable is the candle pubs.

    In my next article I'll show You what exactly is this instrument.

    Hope You will find it intriguing as much as I did.
    I Will appreciate Your opinions.


  2. #2
    Secondly consequence:

    Moving average:

    Moving average has attained quite similar effect 137 pips, which is also not much after 640 bars, and few changes of management.

    Best result within total time frame (640 bars) was 637 pips throughout 356 bars.

  3. #3
    Third result given by RSI [15, minutes=45, max=55]

    RSI gave the weakest result, approximately 67 pips that still is positive, but in accore with my expertise for example RSI egy is likely to change management the most often out of those 3 egies. Last result will be much lower, maybe negative.
    RSI at its very best time within 640 pubs has gained 566 pips in 217 pubs.

  4. #4
    To give You more interest, why not to look at this for, let us say MACD egy;

    (5,15,25,close) trade 1 if the MACD has closed over, and -1 if the MACD has closed under 0.

    AHH, really important. Those indiors are not repainting. Conclusion of direction change is always based on already closed pub (x 1).
    Otherwise, if a decision was based on a x ray candle that this would gave optimistic result.

    OK, let's get back to our MACD egy:

    Quite poor but nevertheless positive. Approximately 8 pips at the end of the test. But, during the test it got much better time. It was able to receive 537 pips in a 105 bars that is among the best results of preceding egies.

  5. #5
    OK, one more instance: again MACD, this time some slower one (15,50,25,close):

    This MACD has given probably the best outcome around 550 pips. This was getting pips quite constantly comparing to other egies above.
    What's also important between start and complete it did not have far more potential to earn, so if someone was consecutive in this egy in this period he left probably the ideal option.

    So let us stop with more egies for quite a while and let us try to analyze in following posts what we really got previously, and what exactly we can read out of these charts.


  6. #6
    Let us make some conclusions:

    1. All of egies gave positive result!
    Does this mean that each egy after some specified time is profitable, so consistency is the key, as I often read on many threads?

    Absolutely not! The only reason why those 4 or 3 egies gave positive result is just luck. To be exact: lucky positioning of two vertical lines on the beginning of the thread. If we place it differently We would likely had most of them loosing, but not all.

    2. Best result that's 550 pips were obtained during 640 candles. This is average 0.8593 of their pip per 1 hour of a trading week .

    Let us be fair. This really isn't the result a Rookie like me is searching for. Especially, this doesn't include pips loosen on disperse when changing direction.
    Worst end result is 8 pips following 640 trading hours. That's 0.0125 of a 0.0001 part of the price each trading hour .
    Someone could say that this is still PLUS 8 pips and if for somebody 1 pip means state 100$ than he's 800$ plus after 640 bars .
    OK, however if for somebody 1 pip is 100$ than following first 398 hours that he likely was -36000$ and wasn't certain if this egy could gain some pips up.

    3. When a trader would understand (hah! ) After the egy really works, and if doesn't, he can make much greater results in a much shorter spans.

    If You have some questions around now, or would like to look at several other straightforward egies, please publish.
    When what I'm writing about is hard to know please write - my english is....as it is, sorry.


  7. #7
    I believe that single image is frequently worth more than thousands of words.
    So, allow me to post another image for this thread, I feel a number of you may find it interesting:

    On this chart I put an outcome of another 2 egies such as the one in point (3), but changed the input parameters like I wrote on the chart.

    Finally we have discovered a egies, that gave negative result after 640 bars, so today have a proof, that not each egy provides positive result after 640 pips.
    I also split the whole range of 640 pips into components: 1,2,3.
    About each part We can tell very well that the price (green chart) is mostly growing or it's mostly falling.
    We are now able to check how during this components was every egy acting, and how/when it changed through another area.

  8. #8
    There ought to be one more remark about this way of egy testing.
    Once I wanted to compare if outcomes seen on these charts are common with results given by a MT Strategy Tester, so I checked it for few of egies and different timeframes.

    The end result was YES! This was more-less identical.

    That might imply, the idea lying behind this way of testing the egies is appropriate.

  9. #9
    In place #8 I set on a chart two quite similar egies results based on RSI. The one difference between these was the range of RSI around that trades were obtained: 40-50 and 50-60.
    This is to check whether egies based on quite similar assumptions work the same under same market requirements.
    Of course we can anticipate it will not, since MT4 egy tester could give us different results, so the exact same must demone the indior.

    In parts 1 and 2 of this chart from article #8 when one indior is earning, the second one is loosing.
    RSI 40-50: Mixing when trend was marginally up; making trend was marginally down.
    RSI 50-60: opposite

    This is really something we can anticipate, because when trend is slightly increasing, the greater RSI the less likely it goes below 40 to give a condition of long trade.
    When fashion is slightly down, the exact same RSI will not probably go over 60 to give sign for market. Strategy is then on long-term and it keeps tripping.

    There's also a part 3 where the two RSI egies are loosing. This is powerful trend, and in that condition (regardless of if trend up or down) RSI oscillator egy will give frequently lousy results.

  10. #10
    If you are trying to trade the swings on the 1HR chart, you need to use the 4HR chart. Also, can you post charts from this century on your explanations?

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