Trading Strategies Revealed – “Fakey Pattern” review

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 tradesWinning ratioMax. drawdown
-28.47%50726.63%29.52%

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:


Analysis Insights



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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If you need your own automated trading software designed based on your individual requirements, make a request for a free consultation with our team of professional programmers and find out the cost and terms of your project development.

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RISK DISCLOSURE

Trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical or Simulated performance results have certain limitations, unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.

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