MT4 Forex News Indicator
Trend reversal trading strategy “Fakey Pattern” is designed mainly for Forex and can be used on all currency pairs on any time frames. Its rules state that:
A trader should place a buy stop order at a high of the signal candle upon a bullish “Fakey” pattern during a downtrend. A sell stop should be placed at a low of the signal candle upon bearish “Fakey” pattern during an uptrend. The stop loss should be placed at the high/low of the signal candle with 1:2 Risk-to-Reward ratio. To define trend we have used 3 EMAs with 10, 25 and 50 periods.
For more information please refer to https://priceaction.com/price-action-university/strategies/fakey/
For our test, we have used a Trailing Stop which is launched after a trade has started and is modified each new 1 pip of profit. From our point of view, such approach allows to maximize profit and minimize drawdown. We have run the test for 2010.01.01-2019.06.16 using Control Points modelling on EURGBP-H1, with no leverage, without reinvestment, assuming spread equals 10 ticks, with starting balance 10000. These are the main parameters of financial performance, that may allow you to evaluate whether this strategy worth your attention or not:
|ROI||# of trades||Winning ratio||Max. drawdown|
The following charts may give some possible insights on which filters to apply (time sessions, day of week limitation, trend strength threshold, overbought/oversold conditions, volatility range) to turn this strategy profitable should you decide to use this strategy in your investment portfolio:
1. Buy trades that were opened when Accelerator Oscillator showed green histogram brought more profit compared to buy trades that were opened when Accelerator Oscillator showed red, when trading popular candle pattern strategy “Fakey Pattern”. While Accelerator Oscillator shows the acceleration or deceleration of current market driving force it is undesirable to buy when the current histogram is red and to sell when the current histogram is green.
2. Our analysis of “Fakey Pattern” trading strategy during 2010–2019 has shown that the most unprofitable hours to trade were 6am and 8am. This may be due to the fact that at the morning the probability that price will change its direction is less, while “Fakey Pattern” is a trend reversal strategy.
3. We have tested the “Fakey Pattern” strategy on most popular Forex pairs such as EURUSD ,GBPUSD, USDJPY, EURGBP, EURJPY, GBPJPY and it has shown negative result on each of them.
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