During this weekend I released the first official version of Watukushay No.5 coupled with all its 10 year backtesting data showing profitable results on 6 different currency pairs in Asirikuy. From my last post about this EA you might remember that Watukushay No.5 had been tested on the EUR/USD, GBP/USD, USD/JPY and USD/CHF, however at that time I hadnt completed my analysis on two other currency pairs that also show us great results with this strategy despite their overall lack of liquidity, the AUD/USD and the NZD/USD. On todays post I want to share with you some of the results of the EA on these currency pairs and how the EA is able to use a completely different trading technique to profit from the different trading mechanics of these two instruments.
As you may already know, Watukushay No.5 attempts to exploit breakout inefficiencies on the different currency pairs. On the 4 majors this is done by exploiting periods of low volatility when the currency pairs form significant ranges, entering breakouts when important moves develop within the following trading sessions. However, these trading tactics do not work well on the AUD/USD and NZD/USD, not only because they tend not to form areas of compact trading but due to the fact that this areas do not lead to successful or unsuccessful breakouts with any statistical significance. In the end if you try the same tactics as with the majors you will obtain slightly profitable results which are definitely not worth using in live trading.
Upon my analysis of these two instruments it became clear that I needed to think the problem from another perspective if I was going to find any profitable results for this EA on these two pairs. This meant going back to a meticulous analysis of the currency pairs and the way in which the medium and long term trends develop within them. After spending a few days working on this I finally realized that the key was to rely on breakouts of more volatile sessions but aiming at much higher take profit and stop loss targets. The idea was that this large breakouts do allow us to predict long term trend direction with a good statistical edge in the long term.
Backtesting results were indeed very encouraging showing me that my analysis had been right. When you exploit this different and larger breakouts on the AUD/USD and the NZD/USD, you obtain some very profitable results which are achieved as the EA is able to follow long term trends through the periodical entering of this large session breakouts. The effect resembles the accumulation technique used by the turtle trading system, allowing us to follow a trend and greatly profit from its long term direction. Below you can see a picture of how this trading works on the NZD/USD, notice how the EA got a lot of profit from a developing trend.
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The 10 year backtesting results also give us great results for both of these currency pairs. We arrive at results which have average compounded yearly profit to maximum draw down targets better than Watukushay FE and the same as Teyacanani on the EUR/USD in the case of the NZD/USD. Surprisingly, the best trading results for this EA have been found on the NZD/USD, showing us the robustness of this strategy as a portfolio solution. The EA shows us its robustness and its ability to exploit two completely different market inefficiencies based on the same trading mechanics but aiming for entirely different things.
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Later today 3 live accounts with real money will be added to Asirikuy to start the testing of the system on the USD/CHF, NZD/USD and a full portfolio setup. Hopefully within the next year we will be able to gather some very useful information about its trading system, its tactics and its ability to tackle changing market conditions. The ability of this EA to adapt to each particular market situation and its very large set of adaptive parameters will probably lead it to succeed in this quest against market changes.
If you would like to learn more about automated trading and how you too can develop your own likely long term profitable systems please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !
As you may already know, Watukushay No.5 attempts to exploit breakout inefficiencies on the different currency pairs. On the 4 majors this is done by exploiting periods of low volatility when the currency pairs form significant ranges, entering breakouts when important moves develop within the following trading sessions. However, these trading tactics do not work well on the AUD/USD and NZD/USD, not only because they tend not to form areas of compact trading but due to the fact that this areas do not lead to successful or unsuccessful breakouts with any statistical significance. In the end if you try the same tactics as with the majors you will obtain slightly profitable results which are definitely not worth using in live trading.
Upon my analysis of these two instruments it became clear that I needed to think the problem from another perspective if I was going to find any profitable results for this EA on these two pairs. This meant going back to a meticulous analysis of the currency pairs and the way in which the medium and long term trends develop within them. After spending a few days working on this I finally realized that the key was to rely on breakouts of more volatile sessions but aiming at much higher take profit and stop loss targets. The idea was that this large breakouts do allow us to predict long term trend direction with a good statistical edge in the long term.
Backtesting results were indeed very encouraging showing me that my analysis had been right. When you exploit this different and larger breakouts on the AUD/USD and the NZD/USD, you obtain some very profitable results which are achieved as the EA is able to follow long term trends through the periodical entering of this large session breakouts. The effect resembles the accumulation technique used by the turtle trading system, allowing us to follow a trend and greatly profit from its long term direction. Below you can see a picture of how this trading works on the NZD/USD, notice how the EA got a lot of profit from a developing trend.
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-The 10 year backtesting results also give us great results for both of these currency pairs. We arrive at results which have average compounded yearly profit to maximum draw down targets better than Watukushay FE and the same as Teyacanani on the EUR/USD in the case of the NZD/USD. Surprisingly, the best trading results for this EA have been found on the NZD/USD, showing us the robustness of this strategy as a portfolio solution. The EA shows us its robustness and its ability to exploit two completely different market inefficiencies based on the same trading mechanics but aiming for entirely different things.
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-Later today 3 live accounts with real money will be added to Asirikuy to start the testing of the system on the USD/CHF, NZD/USD and a full portfolio setup. Hopefully within the next year we will be able to gather some very useful information about its trading system, its tactics and its ability to tackle changing market conditions. The ability of this EA to adapt to each particular market situation and its very large set of adaptive parameters will probably lead it to succeed in this quest against market changes.
If you would like to learn more about automated trading and how you too can develop your own likely long term profitable systems please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !
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