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CandleSurfer H4 Trend Strategy

Hello traders and investors. I am an experienced trader here on Darwinex, owner of Darwins UEI and GRF

For more info on these please see my diary here (please be aware that GRF is a laboratory of numerous strategies yet to be whittled down/ refined. I am running it so I can see how it performs as a Darwin relative to my normal trading account - I would not recommend buying this at the moment):


I have been working on a new trend following strategy, based on price action on the H4 time frame. I have now coded this as an EA, which I am running on a demo account for a few months, until I get to around 100 trades or so.

The EA runs on GBP/JYP and EUR/USD as these are relatively uncorrelated and seem to trend quite well/ regularly.

At the moment I am testing three variations on a theme with EUR/USD. The three EUR/USD strategies have magic number 2,3&4 on the myfx book page here (GBP/JPY is magic number 1):

My expectation (edge) is that the system will return around a 50/50 win rate but with larger winners than losers. The system aims to let winners run and cut losers early - very basic but very overlooked advice!

Any comments or questions are more than welcome and I will be launching this as a live Darwin once I am happy that it has been tested on demo for long enough.


Ok, so took out 2 of the three variations on a theme trading EUR/USD and just stripped back to the basic strategy on this pair.

The three versions running on the same pair just meant three times the hit so I was never going to learn anything continuing like that! Stripping back to the basics means I can see any obvious flaws and start amending the strategy as appropriate.

Added several “trendy” assets including a few indices and commodities and immediately caught a beautiful bullish trend on Gold today, exactly as intended and certainly gives heart. Hopefully first of many!!


Note to self: check minimum volume size on indices!! Lesson learnt

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Very early days but edge is starting to emerge. 5 trades on EURUSD 20:80 win:loss rate. Avg win pips are 1.4 times avg loss.

Again, too early to draw any conclusions but just going off the entries so far I might consider using a fast indicator/filter directly prior to entry. The first loss trade had a flat market immediately prior to entry. winner had a trending market in the direction of entry. second loss trade was initially in profit and again had a trending market immediately prior to entry…

All entries went positive after entry so no issue with these so far…

XAU/USD - 8 trades, 25/75 win loss rate +0.26% 1.11 profit factor

Edge playing out over greater number of trades?

Not convinced a fast filter would have worked for the losing trades here… most were profitable for a few bars after entry, so no issues with these.

Losses were due to reversals several bars after entry…if anything I need to look at a trade “health check” monitor to look our for weakening trend… without ruining the edge…

USD/JPY - 2 trades which I’ll chalk up to trend exhaustion as it seems as if I had started this test earlier on in the trend i would have reaped decent pips…

AUDUSD -trade not even closed yet but v close to SL.

Again, a fast filter may have been useful but generally the argument for an entry was sound. Possibly a bollinger band filter after entry might be good…

So, at this early stage I’m generally happy with entries so the case for a filter prior to entry seems unnecessary.

What might be useful is a bollinger or envelope filter after entry in addition to the hard stop loss to monitor price action vs expectation

May get a re-entry if price drops back into the channel again. Hasn’t “popped” convincingly and is now consolidating so I’m still bearish

Adjusted risk per trade to 0.5%, reason being psychologically its easier to handle this scale of loss more often, which in turn means less temptation to tinker with other aspects of the strategy

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Maybe should have taken regard of the bullish channel…

Good entry and would have been profitable with a larger SL

Channel on EURJPY - not a bad entry but lets see if the trend has any legs - may be a slow burner if price keeps respecting the channel

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Removed Natural Gas and FTSE100 assets as the minimum volume size is 0.1. Part of being a trend trader is being able to stomach lots of small losses and the min sizing on these assets doesn’t allow for that.

trailing stop on texas oil short as hit 2:1 reward to risk

Price did indeed respect the channel - SL took me out early but entry was sound

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Better entry points on EURJPY- one or maybe both would have been entry points for the system if test started earlier so will try to chalk the later poor entry to that

Something to consider - smaller position sizes, larger stop loss

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