DuettoFX Hits Again: +482 Pips After 3 Trades 10


Ciao a Tutti,

this post is a follow-up of “Risk Averse Approach to DuettoFX Trading“, where I explained that some pairs – EURUSD (in the duetto vs USDCHF), AUDUSD (in the duetto vs USDCAD) and USDCAD (in the duetto vs AUDUSD) – can be traded quite effectively with dynamic SL and TP levels based on recent price action. More precisely I used H1 charts and DuettoFX with the default period (120) and I looked at price action over the previous 60 bars. Then I measured 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 EURUSD trades over the last few months. Last Friday (Feb 24th) I closed the third trade in a row on EURUSD (the pair I mostly trade) using this technique with a substantial profit (+248 pips). Here is a picture of the last three trades (click on the image for zooming in):

The first two trades were closed with gains of +99 and +135 pips respectively. Using the “close and reverse basic strategy” the first two transactions would have closed with an overall loss.

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 6th of Feb 2012 and closed after 21 hours.
The blue dotted line is the standard exit using the “basic strategy”.
The second solid blue line is the actual exit of this Long trade with +99 pips gain.

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Trade #2 opened on the 14th of Feb 2012 and closed after 33 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 +135 pips gain.

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Trade #3 opened on the 20th of Feb 2012 and closed after 4 days and 15 hours.
This trade would be still open according to the “basic strategy”.
The second solid blue line is the actual exit of this Long trade with +248 pips gain.

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The overall profit was +482 pips which is not bad considering I only had to enter 3 trades with fixed SL and TP levels. The backtests have proven this strategy has been effective over (at least) the last 26 months. I hope this information can help you improve your trading with DuettoFX 😉


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10 thoughts on “DuettoFX Hits Again: +482 Pips After 3 Trades

  • Jason

    Morning,

    This is very good news, it highlights a possible exit strategy for the upcoming ea. I for one am looking forward to it as I am unable to trade 1 hour charts because of work.

    thanks

    Jason

    • Paolo Post author

      Hi Jason, for sure this exit strategy is very easy to implement. Anyway I hope to come up with a more sophisticated exit strategy that works on a wider range of currency pairs.

  • Paul

    Hi Andrea,

    Sorry to be dumb but on the screenshot #2, it appears your entry short is where the Green cloud is way above +2.00 and I know we are usign the one pair strategy but surely the green cloud still represents the pair it is applied to i.e. the one you have gone short on – or is the chart of the opposite pair i.e. ‘instrument 2’?

    Cheers,

    Paul

    • Paolo Post author

      Hi Paul, I assume you are referring to the second picture in this post, which is related to trade #1. This is a Long trade which was entered as soon as the green cloud had a width >= +2.00. The cloud represents instrument1 (EURUSD) versus instrument2 (USDCHF). Ciao, Paolo

  • Paul

    Hi Andrea,

    Yes that was it, I thought Picture 1 = Trade 1 and so on….

    Thanks for clarifying as this is the method I plan on trying out :-)

    Grazie mille

  • Jim

    Hi Andrea,
    Interesting – however this got me wondering what the advantage of DuettoFx was over PotenzaFx if we are only using a single pair.
    So, I checked out if the the same trades would have been chosen using PotenzaFx and as far as I can make out Potenza Fx would have got you in the market slightly earlier on the 6th and 14th of February and a few days earlier than the 20th February thus giving potential for even greater profit.
    I would be interested to have your comments on this – could it be that the only advantage of Duetto Fx is if you use two pairs in the non-directional mode thus achieving a measure of ‘Hedging’

    • Paolo Post author

      Hi Jim, with DuettoFX you are not tied to a single pair, there are many “duettos” to be traded and each of them involves a trade on 1 or 2 pairs (only one or both pairs of the duetto itself, the choice is up to the individual trader). In this post I only focused on EURUSD because – as I explained with “Risk Averse Approach to DuettoFX Trading” – there are only a few pairs that can be traded using DuettoFX along with dynamic SL and TP levels, and EURUSD is one of them. I’m trying to figure out the most effective SL and TP levels also for other pairs.
      Comparing DuettoFX with PotenzaFX I noticed many different entries. The indicators compute data differently, so this is obvious. In the end many anticipated/delayed entries or false signals make a lot of difference between two trading strategies. Both DuettoFX and PotenzaFX fall in the realm of “trend following” strategies, so their entries may overlap sometimes, but they are two different strategies nonetheless.
      DuettoFX applied to inversely correlated pairs (like I’ve always shown so far) does not involve hedging. On the contrary your exposure is doubled on a single currency (e.g. double short exposure on USD when you trade long EURUSD and short USDCHF at the same time). This strategy has more risks and (far) more potential than a hedging strategy.

  • Tony

    Hi Andrea & Paolo, We have all seen the big potential for manual trading DuettoFX. The problem is no matter where you are in the world you still need to watch your screen 24/5 to spot the system entry. How do you manage this issue? With a sole trader watching the screen around the clock is near impossible.
    Would you therefore give further consideration to offering a linked trading service to signal trades to nominated broker accounts, or alternativly an SMS message service.
    Thanks, tangocharlie.

  • john

    my objective is to find subtle uses for Duettofx. Here is a maybe!

    1. 5 min chart for gbpusd.
    2. duetto at 300 bars gbpusd vs usdchf
    3. on 29feb about 1800h, spread was negative but both traces above 50 line. ie asymmetrical
    3a. stayed that way all day on 1march.
    4. On 2march about 0915h, trace of gbpusd went below 50 line, ie symetrical, ie action was usd dominant

    this maybe is a one off, or it might encourage others to find better ideas!