Monday, January 4, 2016

Review of December Campaign

I can't believe it's 2016! 

December was relatively quiet. I chose to sit out of the market midway through December as Christmas approached.

Trades opened: 5
Profit factor: 4.07
Account growth: 4.54%

I only opened five trades, which is really quiet. I definitely could've traded more as the week before Christmas was volatile enough to trade. I think I was too conservative in deciding to sit-out half the month.

Major Developments

I recently finished designing a new system for the 4H timeframe. The backtest covered the major pairs and consisted of 248 sample trades over the last 2.5 years. I looked for very large pinbars (range > 1.5 ATR(6)), and found those that formed at 08:00, 12:00 and 16:00 tended to perform well (the time is based on NY close), especially if the reward-to-risk exceeded 1.67-to-1 (entry is the break of the pinbar, with my stop loss placed at the end of the long wick). 

Here's an example equity curve for reward-to-risk of 1.67-to-1, using 2% risk per trade, initial balance of $25,000.

(click to enlarge)

At the moment, I only trade the daily and weekly timeframes. If I can start trading the 4H timeframe, then my number of trades per month will increase significantly. Lets hope! 

One thing I noticed is that lower timeframes seem to require a higher reward-to-risk to be profitable, while the daily and weekly timeframes tend to favour smaller reward-to-risk. It's just an interesting observation. I wonder if this pattern will hold in my next 4H system. 

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