This is a well-known trading strategy that many people say performs well, so I also tried to put it into practice.
Despite the relatively simple entry and exit rules, unexpectedly, my trading strategy did not seem to perform well.
In fact, the profit factor was not high, while the maximum drawdown was relatively high.
I was quite surprised by my results, which were different from others’ and somewhat unexpected.
Perhaps it’s because my programming skills need improvement, resulting in poor strategy performance.
The entry and exit methods for the Vegas Channel strategy, I referenced many YouTube videos and online articles, researching the entry and exit criteria across various trading strategies.
Each trader seems to have slight differences in their approach.
However, most evaluate long/short trades using two MA groups, and mainly rely on MA12 as the reference indicator for entries and exits.
But these are just sharing, and the results may not meet expectations when trading this way.
The backtests I conducted referenced what many people do, then I added some minor conditions. Overall it looked decent.
For this MA group-based approach, I think catching the trend is a good way to go about it.
This method can also be used to determine the major trend.
Strategy Description
I will only explain how to go long here. Going short is the opposite. There are two stages for determining entries.
There are two main groups: Group 1 contains ma144 and ma169, Group 2 contains ma576 and ma676.
First stage condition:
- Group 1 is greater than Group 2, and ma12 is less than Group 1 is greater than Group 2
Second stage condition:
- Execute order when ma12 crosses above Group 2
Backtesting Validation
Strategy Review
Finally, based on common conditions, I made a simple optimization – just adding a trailing stop loss.
The stop loss method is when profit reaches 50% of the preset take profit (TP) level, the stop loss is adjusted to the entry price. That’s it, haha.
Another adjustment is pyramiding.
When the current open position becomes profitable, I will add to the position.
This approach also improved the profit factor. However, I believe there is potentially more profit potential in this strategy that can be tapped through further optimization.
I will share any new versions in the future.