DuettoFX Hits Again: +392 Pips After 4 Trades 15


Ciao a Tutti,

this post is a follow-up of “DuettoFX Hits Again: +482 Pips After 3 Trades“, where I showed how I was able to rack up a substantial amount of profits on EURUSD during last February using the DuettoFX indicator applied to a hourly chart, and using dynamic SL and TP levels based on recent price action. Our backtests have confirmed that this approach is effective on a handful of currency pairs – EURUSD (in the duetto vs USDCHF), AUDUSD (in the duetto vs USDCAD) and USDCAD (in the duetto vs AUDUSD). The (simple) trick is to look at price action over the previous 60 bars once a new trade is entered. Then you measure the distance from the entry price to the highest high (in case of a short trade) or the lowest low (in case of a long trade). SL and TP are placed exactly at such distance from the entry price, so the risk:reward ratio is 1:1.

This approach was derived from my empirical observation of DuettoFX trades on EURUSD over the last few months. Today (March 26th) I have completed another batch of four trades on EURUSD using the same technique and pocketing +392 pips overall. Here is a picture of the last four trades (click on the image for zooming in):

Only the second trade was a loser (the projected TP was completely off track this time) while the other 3 trades were big winners with the dynamic TP being able to capture lots more profits with respect to the “close and reverse basic strategy”.

As usual I’ve included a more detailed picture of each trade (click on each picture for a better view):

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Trade #1 opened on the 2nd of March 2012 and closed after 36 hours.
The red dotted line is the standard exit using the “basic strategy”.
The second solid red line is the actual exit of this Short trade with +186.6 pips gain.
Before this trade I was also able to capture another +120 pips of the EURUSD downfall with a DuettoFX divergence technique explained in this post.
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..

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Trade #2 opened on the 8th of March 2012 and closed after 17 hours.
The blu dotted line is the standard exit using the “basic strategy” and also the actual exit with a -39.2 pips loss.
The second solid blue line is the projected exit with dynamic TP that didn’t work out this time.

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Trade #3 opened on the 9th of March 2012 and closed after 3 hours.
The red dotted line is the standard exit using the “basic strategy”.
The second solid red line is the actual exit of this Short trade with +72.5 pips gain.
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Trade #4 opened on the 16th of March 2012 and closed after 6 days and 5 hours.
This trade would be still open according to the “basic strategy”.
he second solid blu line is the actual exit of this Long trade with +172.3 pips gain.

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The overall profit was +392 pips which is not bad considering I only had to enter 4 trades with fixed SL and TP levels. If I look at the last 7 trades (starting from Feb 6th), the total PL is +874 pips (about +125 pip per trade on average). The backtests have proven this strategy has been effective over (at least) the last 27 months.

Right now I’m trading this strategy on autopilot using the “DuettoFX Swing Trader” EA that I’ve coded. This EA will be on sale next Thursday (March 29th) along with the “DuettoFX DLS Trader” EA coded by Andrea. These are definitely two EAs that will give a boost to your bottom line in 2012 😉

Please be aware that last week we changed our pricing scheme as explained in this post :-)


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15 thoughts on “DuettoFX Hits Again: +392 Pips After 4 Trades

  • Edwin

    guys this is totally awesome.!!! can’t wait for the EA to come out…keep up the good work don’t sell out to the big firms…us little guys need in on the action to..:)

    • Paolo Post author

      Hi Wayne, DuettoFX DLS Trader acts much like PotenzaFX DLS Trader, it uses a DLS (Dynamic Lot Size) approach. That means it scales in and out positions based on the width of the DuettoFX “cloud”. As an example if the green cloud gets bigger and bigger the DLS trader continues to add trades to the current Long position. As soon as the green cloud begins to shrink then the DLS Traders begins to unfold some trades (starting with the ones that were opened at the beginning of the trend). This is the standard strategy Andrea has been running for months. On the other hand DuettoFX Swing Trader opens only one Long trade when the cloud gets green and only one Short trade when the cloud gets red. It is also able to set optimal TP and SL levels based on recent price action. This approach works extremely well on the pairs ERUSUD, AUDUSUD, and USDCAD.

  • Dan

    I’m really looking forward to this one!
    Is the dynamic TP and SL automatically calculated for each trade in the EA?
    What would happen if the price came close to the TP and then reversed backwards to close for a loss? Are you worried about this or are you confident that the vast majority of times it will actually hit the TP?
    Do you see these 2 new EAs complementing each other in different ways? And do you see any opportunity to increase the success of the swing trading EA with DLS compounding also?

    Cheers
    Dan

    • Paolo Post author

      Hi Dan, thanks for your interest. Of course dynamic TP and SL levels are automatically calculated for each trade. As an example for the last 4 trades on EURUSD they were respectively 186.6, 161.6, 72.5, and 172.3 pips. Only the second trade in this series did not reach the +161.6 pips take profit and was closed with a -39.2 pips loss because a trade in the opposite direction was triggered. The % of winning trades on EURUSD, AUDUSD, and USDCAD over the last 27 months goes using this technique goes from +79% to +88%, so this strategy os pretty reliable. I’ve not implemented any trailing stop mechanism into the EA because in my experience it only makes performances worse. Look at the last trade closed on EURUSD and you will understand what I mean: there was no way to pocket +172.3 pips using any trailing stop algorithm.
      Of course the two EAs (DLS Trader and Swing Trader) do complement each other nicely. For the moment I’d like to keep the Swing Trader simple like it is now, I’m not planning to add any compouding in the near future.

  • Joe

    Hi Paolo,

    I’m all excited and can’t wait till Thursday. I have a few questions:
    1) What are the win loss percentage?
    2) What is the highest number of consecutive losses?
    3 What is the maximum drawdown?
    4) From the equity/balance graph, it looks like all the Duettos are highly correlated. So is it fair to say that there is a good chance that if one duetto turns to be a losing trade, then it is very likely the other duettos trades entered around the same time would be losing trades as well?

    • Paolo Post author

      Hi Joe, thanks for your interest :-)
      The % of winning trades on EURUSD, AUDUSD, and USDCAD over the last 27 months goes using the Swing Trader EA with the dynamic SL and TP feature enabled goes from +79% to +88%. The max number of consecutive losses in my backtests is 3 for AUDUSD, 4 for USDCAD, and 5 for EURUSD. The max drawdown (max excursion from an equity high to a equity low) is around 600 pips. Yes there is some correlation in the equity lines, but it is not so strong. Look at the first graph in this post http://pimpmyea.com/1000-pips-per-month-with-a-single-indicator/ and see how the cumulative PL increases pretty much constantly over the entire period. If the losing streaks were all overlapping across the different pairs then the cumulative equity would zigzag much more.

  • Francis

    Hi Paolo & Andrea,

    Does the DuettoFX EA of itself draw the DuettoFX indicator lines/curves on the MT4 chart? I am assuming it won’t and that’s why folks that want those lines/curves drawn on the chart will need to purchase the indicator separately. Is this correct understanding?

    Hear from you soon. Thanks.

    • Paolo Post author

      Hi Francis, you are correct. The EA does not display the “cloud” and it doesn’t need the DuettoFX indicator installed in order to work. The same algorithm of DuettoFX indicator is hard-coded into the EA.

  • Tim

    Hi guys,

    What minimum balance would you recommending trading with these 2 EA’s in order to achieve results (and allow for any drawdown)?

    Thanks,
    Tim

    • Andrea

      Well Tim, a lot depends on the number of pairs you’ll trade at the same time. The drawdown is quite limited.
      To have a very limited DD (lower than 5%) we are using 0.1 lots and 10 steps on the DLS approach for a 10k account. We are trading 8 duettos at the same time. That is just an example.

  • Joe

    Hi Paolo,

    Do you think you can tell us how much will the EA cost, and what would be the new pricing for the indicator? I just want to plan ahead in order to decide if I should purchase the indicator or not.

    Thanks

    • Andrea

      Hi Joe,
      Buying the indicator before the release will always be an advantage as you’ll have both (EA and indicator) for the price that after the EA release will be for the EA only. The same applies to all the indicator we released since now.

    • Paolo Post author

      Hi Joe, for a short period of time Guardian will still be in place. We are implementing another protection mechanism in the meantime.