I have previously shared on my Facebook an interesting strategy for AUD/CAD, and since there were very positive reactions I have decided to write something more about it and at the end I have prepared homework for you. So please write your comments on Facebook and we will have a look at it next week and I will write my solution for you.
How did I find the strategy?
Strange is that I have found this strategy by coincidence when I did AUD/CAD pair tests. I’ve researched for the most profitable strategies, and I’ve noticed that a lot of them are really simple, and I got interested in this one. But let’s first have a look at the results.
With a position of 0.1 lot:
Backtest time: 3rd January 2006 – 13th March 2016
Gain: 8135 USD
Number of trades: 1331
Percentage of profitable trades: 74,91%
Max. DD: 857 USD
With a risk of 3% per trade and initial capital of 1000 USD:
Gain: 10993 USD
Max. DD: 1167 USD
The results are really good. Additionally, the strategy works on all timeframes except D1, which is a big plus and it means that the edge is really strong. Let’s look on how the strategy works.
The principle of strategy
Entering LONG (short is the opposite):
CCI (20) <0
SL: 129 pips
PT: 55 pips
SL and TP values are not rounded, but the strategy is not extremely dependent on it.
In principle, it is very simple and the logic of the strategy is easy – AUDCAD is a market that tends to go sideways. So, once the CCI shows market surplus, it’s time to speculate on the correction. SL is bigger than TP, but it is happening always when the strategy is having 75% of profitable trades. We can either have a high percentage of profitable trades or a positive RRR, but we cannot have both together.
- Extreme simplicity
- Over 90% of SL and TP combinations work
- When the CCI oscillates around zero, the strategy does many trades
- Strategy is not passing through standard robustness tests
It does not pass through standard robustness tests, but that does not mean it is not interesting. There are strategies that do not pass through but they make money.
However, a lot of trades when CCI oscillates around 0 is a disadvantage that can be solved.
Do you have any idea how to improve this strategy? Let’s share your ideas!