Fx Back test

Testing the 1 Hour Chart

I decided today that I would apply my algorithm to a couple of different time frames, tried it on the 1 hour and also the 4 hour time frames, I used the same rules as specified in the no nonsense blog, the ATR is smaller so therefore as are the TP and stoploss levels, but with risk management the outcome would be the same if you adjusted the lot sizes too suit. 

I scanned across all the major pairs in Forex trading and Ive also added the Singapore dollar pairs I could find at my broker along with gold and silver.

Today I also downloaded periscope, so I could broadcast my desktop live whilst placing demo trades, this is purely for entertainment reason only as I'm not a financial adviser and if you copied them, then you do so at your own risk, with no liability to me.

One last thing - dont forget that most of this info is freely available at 

No Nonsense Forex   

Go and check it out, its a great resource to us all

Good Intentions

Had good intentions of getting up early today to do some more forex trading back testing and maybe even make a YouTube video too, so tired from night shift I slept right through. Think I’m going to have to put it back until the weekend as I find it impossible to try and burn the candle at both ends.

When can I back test?

So although going through the motion of how to build an algorithm For forex trading on MT4 I already have an algorithm on MT5, I’ve back tested to the best I can, because FX Blue doesn’t allow for multiple indicators on the same chart during back test. Anyway I now need to forward test but the daily candle in my time zone closes at 10pm, now that’s fine if I was working on day shift but since I’m on nights until Christmas it kind of puts me back on my back testing a few months.

Only solution I can think of is to go to the next time frame up, the weekly chart, on demo this is fine but the problem I can see if it was a live account, is the fact that the stops would be so wide that even with small lot sizes, it would still be high amount given that the ATR can run into hundreds of pips on some currency pairs.

Results maybe out of line when compared to trading the daily time frame but it will allow me practice when planning and executing trades within the MetaTrader5 platform, giving me to to become competent at what we need to be and iron out any mistakes even before starting demo testing proper.

So yeah let’s have a go on the weekly, I may even make a video and practice my editing skills too👍🏻

How I'm going to build an algorithm for Forex Trading #1

How I'm building my algo Back test No 1

How I back tested my moving average set at a period of 8 on the daily chart using the AUDUSD currency pair, I tested this using a basic cross and close method, where if the moving average was broken I then place a trade in that direction, results were not significant in money terms and it only had a strike rate of 50%, profits would of been had a let the trades run and not capped my upside, however that wasn't the idea of this test, I will carry out a further fours tests using a moving average as a baseline and hopefully we should see some better results, along with better editing, but hey we all have to learn somewhere.

How to Build an Algorithm

Maybe the title of this post is incorrect, as it probably should've read How I'm going to build an algorithm, as you know from previous posts I follow someone called VP from the website nononsenseforex.com he also has an amazing podcast and YouTube channel too and through his content he has given us a pathway to follow to build an algorithm to allow us to be a successful Forex trader, it wont be easy and it more than likely wont be quick either but nothing comes without a bit of hard work.

The framework he has set is as follows -

Through a series indicators layered up over each other to provide signals of when I should or shouldn't enter a trade, whether to let it run or close out early or for a loss or a profit, these will be the six steps I will take in building my algorithm.

The ATR is built into the MT4 platform is simple indicator of how the price has moved on average over the previous measuring period, default is 14 periods and will be keeping it on this setting as per VP's recommendations and I will be using the daily chart.

So with the ATR I will be trying to identify a baseline I can use to help predict price, initially whilst I try to educate myself I am just going to use a simple moving average and base it on a number of settings, specifically 8, 16, 21, 26, 30. Using a cross and and close method of once the candle has closed above for a buy trade or below if looking for a sell trade, I would then enter the market with a specific set of parameters for a trade with a stop loss of 1.5 * ATR and a take profit of 1*ATR, this does offer a poor risk to reward ratio, but that isn't what I am trying to prove here, it is a simple measurement to prove the moving average baseline theory.

As I have said this Algorithm concept is taken from nononsenseforex.com website, check it out as I found it really educational and I'm sure you will too.

Check back to my blog for regular updates on my how algo journey is going and hopefully we can all learn something together.