Hello,
I realized by looking that the first round of testing I didn’t show too many pictures and it was hard to visualize the trade so I am going to include more screenshots.
As you might notice, this round of testing was done with the new version of ForexTester. I really like it. The original version was good but this version is much more like Metatrader, has added some very useful features and much more user friendly.
As I mentioned in the first round of testing, entering with two equal sized lots really created a sharp increase in profitability towards the end of the testing. Therefore, in this round I did that from the beginning to see if that would make a measurable difference.
The TriScreen trade is as follows (updated from last round of testing):
- Looking for MACD (12, 26, 9) divergence on the 1 hour chart.
- Williams %R (62 period, 10/90 signal lines) has to roll out of overbought or oversold in the direction of the trade.
- Price has to be hitting a support or resistance point. The second peak has to be equal or greater than the first.
- Looking for long wicks or twin towers at the resistance points. Something to show that the level is clearly being rejected.
Click above for larger image
Entry
Price has to be hitting a support or resistance point. The second peak has to be equal or greater than the first. Enter 2 equally sized positions as soon as %R “pops” out of the signal areas.
Total risk between 0.5 – 1% of total account equity per trade. If stopped out and the trade still fits within the entry parameters, enter again but if you are stopped out this time, do not enter again. Limit two entries per trade idea or else you will be prone to revenge trading.
Target
- Minimum 1:1 Risk:Reward ratio
- Target next support or resistance level
Stop
Above or below highest resistance or support point.
Exit
Exit one lot when price hits the target limit. Move the stop on the second position to +5 pips and exit at my discretion. Continue manually trailing stop until stopped out.
Results
Anyway, here we go…
First, the results from the second round of testing:
Click above for larger image
I started out with a $10,000 account and ended with a balance of $35,294 for a profit of 253%. I had 73% winners and I tested 348 trades from January 2001 to January 2009.
As you can see, this second round was more than twice as profitable as the last round. I can attribute the improvement in results to the use of two initial entry lots instead of just one. That is the only factor that was different from last time.
Here are a couple of screenshots from my testing results:
This was the beginning of my most profitable trade during demo trading with a 1,320 pip profit. This illustrates the setup very well. As you can see, this strategy allows you to set the stop fairly tightly.
Click above for larger image
Because this is a countertrend system, you have to watch out when the pair is in a big trend. For example, the above screenshot shows two losses in a row. If you do not limit yourself to 2-3 losses in a row, you can get killed by a trend. I limit myself to two losses.
Successful live TriScreen trades:
So there you have it! The TriScreen is a profitable system but I am always thinking about how to make it better. Here are some things that I may want to test in the future:
- Possibly make the first lot that exits at the limit target twice as big as the second lot.
- Look for a Fibonacci target to exit.
- Maybe trade 3 lots instead of two, exiting the first lot very early to take a quick profit.
- Experiment with other indicators instead of %R to see if they work better.
On the whole, I am happy with the results and I don’t want to mess with the setup too much unless it provides a significant improvement in performance.
Any tips, suggestions or comments? Feel free to leave feedback in the comments block below.
Have a great day!
Hugh
All testing done with the NEW and improved version of ForexTester.
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A good way of determining a good counter trend is also tombstone setup. I do my counter trend when there is a significant bearish or bullish cansle at the end of the trend. And this confirms with a break below or above the 200 SMA.
Cool, thanks. I looked at the tombstone but I was never really a big fan but I’ll revisit it if you like it.
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