CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. -- % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CandleSurfer H4 Trend Strategy

Hello traders and investors. I am an experienced trader here on Darwinex, owner of Darwins UEI https://www.darwinex.com/darwin/UEI.4.22 and GRF https://www.darwinex.com/darwin/GRF.4.3.

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):

UPDATE: SINCE DECEMBER 2018 GRF IS TRADING THE TREND STRATEGY DISCUSSED/ SUMMARISED BELOW

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):

https://www.myfxbook.com/members/candlesurfer/candlesurferh4trend/2694412

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.

9 Likes

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!!

2 Likes

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

1 Like

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

1 Like

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

1 Like

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

1 Like

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

1 Like