Ciao a Tutti,
to be honest the title of this post is not entirely correct, for two reasons: the figure of 1000 pips per month is grossly underestimated (it could be easily twice as much) and the “Single Indicator” is our DuettoFX which – by definition – is the combination of two indicators! So if you want you can read above “2000 Pips per Month with a Duetto Indicator” 😀
This post is the follow-up of “DuettoFX Wins 90 Pips per Day” where I performed an edge ratio analysis of DuettoFX over the last 5 months. I’ve coded a couple of MQL4 scripts in order to be able to automate much of the work involved with this kind of analysis. Therefore I’ve been able to extend the analysis period from 2010.01.01 to 2012.02.15 (25 months and a half) and to 10 hourly charts relative to 5 DuettoFX “inverse” setups (EURUSD vs USDCHF, GBPUSD vs USDCHF, AUDUSD vs USDCHF, EURUSD vs USDCAD, and AUDUSD vs USDCAD). As a result the amount of data I have analyzed this time is more than 6 times larger then the previous analysis (884 trade in total).
Here is the summary table:
A brief reminder: when a candle closes with DuettoFX’s spread <= -2 a short trade is opened at the beginning of the next candle. When a candle closes with DuettoFX’s spread >= +2 a long trade is opened at the beginning of the next candle. After a trade is opened we measure MFE (maximum favorable excursion) and MAE (maximum adverse excursion) as number of pips until the next trade in the opposite direction is signalled, as well as the exact number of pips won or lost by each trade. The resulting trading strategy is quite rough, because it keeps the account “always in the market” and it is not able to protect most of the potential profits. Nevertheless this basic strategy is still able to pocket 1 thousands pips per month on average, which is an extraordinary result. My humble opinion is that this result could be doubled once we figure out a fairly good exit strategy (of course we are working on this aspect).
Please note that some of the curves are flat in the end because this chart has “number of trades” on the horizontal axis and such number is different (as low as 78 and as high as 102) across the 5 DuettoFX setups under analysis. The following chart is even more encouraging, because it clearly shows that the profit potential (measured by MFE-MAE) is huge and quite consistent during the entire 25 months period and across all the pairs:
As you can see the profit potential (about 4 thousand pips per month) is 4 times bigger than the profit gained with our “basic and always in the market” trading strategy.
There is also a special way to trade DuettoFX manually that we’ll reveal in a post next week. The last two reversal signals on EURUSD using this method were on the 13th of January and on the 8th of February