This strategy employs a multi-timeframe approach for trade assessment. Single timeframes can sometimes struggle to capture the entire trend, so I attempted to gather more comprehensive information by utilizing multiple timeframes. This involves trading against the prevailing trend on the current timeframe rather than solely relying on the trend of a single timeframe.
The strategy initially uses the weekly moving average to assess the overall trend. Subsequently, it utilizes the MACD indicator to determine the direction of the mid-term trend. When specific conditions are met, it calculates support and resistance levels based on the current price as reference points for stop-loss. Simultaneously, the strategy monitors for a V-shaped reversal in prices, triggering opening positions upon identification.
This comprehensive strategy combines information from different timeframes to enhance trade assessments. By amalgamating various indicators and techniques, the trading strategy becomes more versatile and holistic, aiding in capturing additional potential trading opportunities.
Strategy Description
Below are listed entry strategies and some parameter values I’ve set. I’ll begin by explaining the long (buy) assessment. This strategy is divided into two-stage assessments, provided for your reference.
First stage condition:
- The current price is above the weekly 200-period moving average (200MA).
- MACD oscillating around the zero line with a golden crossover.
- Calculate and record resistance and support lines.
Second stage condition:
- Determine if the price forms a V-shaped reversal; if not, continue waiting until it falls below the established support line.
Backtesting Validation
Strategy Review
I utilized an EA in the backtesting of EUR/USD from 2017 to the end of 2021. This EA was set with a risk-reward ratio of 2, limiting each trade’s risk to 1%.
The overall profit observed was $300. Despite this improved performance compared to previous strategies, when converted to an annualized return, it only approximates close to 5%.
This indicates there’s still considerable room for improvement. Additionally, trade volume remains insufficient, an ongoing challenge that I’m actively exploring solutions for.
Due to time constraints, I haven’t had enough time to organize the strategy thoroughly.
If needed, I’ll allocate more time for this task.
Feel free to reach out if you have any questions or would like to discuss further.