Death of the Accelerator Trade

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I have been trading the Accelerator Trade for a few months and I have officially decided to stop trading it.  My initial backtesting was done on more recent years data, going back to 2008.

Those results were really good.  I have since gone back to 2001 and also had the good fortune of having an automated script for Forex Tester to help test this trade much faster (thank you Toshiyuki).

My final conclusion verified what I was already thinking.  My gut told me that although there was a statistical probability for price to move back to the Weekly Pivot, there was no real motivation for price to do so quickly. This can lead to a loss of sleep and money.

With the Counter Trend Trade, price has been over extended when it hits the S3 or R3 levels.  Therefore, it should have a tendency to snap back to some equilibrium point, in this case, a Daily Pivot.

Many times, this move is very quick because traders realize that price has gotten out of hand and want to profit from the uncharacteristic movement.  This is a trade that I still like because it seems to perform well in any time period.

Why I stopped trading the Accelerator

However, in the case of the Accelerator Trade, price can whipsaw around and stop you out several times before it actually goes back to the Weekly Pivot.  This will reduce or negate the profitability of the winning trade and since the positions are so highly concentrated, can also lead to large losses in some cases.

Now, this is not to say that this trade can’t work.  There may be something that I am missing.

Like I said, there is a probability that price will get to the Weekly Pivot.  However, there has to be a lot of discretion and supervision involved and that doesn’t really appeal to me.   Secondly, traded strictly mechanically, this trade does not perform well before 2008.

What this tells me is that there required more discretion back then and the trade is curve fitted to a certain degree.   I am looking for a more robust trading strategy that will work over a longer period of time.

Looking ahead

Therefore, I have decided to stop trading this strategy and stick to the Counter Trend trades and my primary strategy for now.  I am in the process of getting an automated script programmed for Forex Tester for this strategy to make testing much faster.

The GBPCHF, GBPJPY and USDCAD work well with this trade but I have not tested it on other pairs.  I would like to be able to test it on all available pairs to see the results.  I have a feeling that there will be other pairs that will respond well.  One pair I have in mind is the EURUSD.

I am also working on another strategy that will be more of a short-term swing trading strategy where I will be looking to make 25-75 pips per move, 2-5 times a day.   For this new strategy, I’m wiping the slate clean and taking a step back to see how I can achieve these goals with minimal risk and stress.

These stacking methods work well, but I know there is a better way to trade.  I think I am finally at the point where I am becoming my own trader and developing something that is my own.  Let’s see how it goes!

If you enjoyed this article, you might also like:

1. May 10, 2010 GBPCHF Accelerator Trade
2. The Death of FAP Turbo
3. May 12, 2010 GBPCHF Accelerator Trade
4. May 19, 2010 GBPCHF Accelerator Trade
5. May 12, 2010 GBPCHF Accelerator Trade Pt. 2