Lock-picking style pyramid verification
Hello.
Fx no Shirabe, I am Satori.
Today is the last day of July.
Now, today I would like to report on verifying pyramid using a stair-step (grid) approach with a limited number of steps.
The tool used is “MT4 Stair-step Pyramid Automatic Trading Tool EA.”
The above image shows the general use of the stair-step (grid) method. It is a buy example.
The above image shows a sell example of the general use of the stair-step (grid) method.
As shown above, it is common to buy by crossing the previous peak (shoulder) and sell by breaking the previous trough (waist).
New positions are placed when the unrealized profit on the previous position is at least 30 pips per position.
Of course, settings can be changed.
The above image shows an example of buying with stair-step pyramid.
Up to a maximum of 6 positions, 5 wins and 1 loss, in one week, +567 pips.
The above image shows an example of selling with stair-step pyramid.
Up to a maximum of 6 positions, 4 wins and 2 losses, in one week, +1167 pips.
Stair-step usually contains the ability to detect an uptrend with higher highs and higher lows, and a downtrend with lower highs and lower lows, which aligns with Dow Theory concepts.
By default, stair-step tries to ride the trend, but since it acts on breakout-type signals, the win rate is not high.
The win rate isn’t high, but since profits are taken by price movement, the average win is typically larger than the average loss.
A method of small losses and large gains.
Normally, for a single stair-step position trading data, a four-year backtest showed the following results.
The figure below is the equity curve.
Trade data for USDJPY 1-hour chart from January 2013 for four and a half years.
Trading lot 0.01
Number of trades: 220
Net profit: 13,833 yen
Win rate: 52.27%
Profit factor (gross profit / gross loss) = 1.46
Take profit: 40 pips
Stop loss: 30 pips
Maximum position hold time: 48 hours
Trend filter used
Average winning width is 38.3 pips and average losing width is 28.3 pips, so on average each two trades leave about 10 pips.
Also, when pyramid was used, the results were as follows.
The image below shows the equity curve with pyramid up to a maximum of 6 positions.
※ When increasing position size, by default, if the previous fill price is higher for buys by +30 pips or more (adjustable), follow-up buys are placed.
Trading lot 0.01
Number of trades: 1582
Net profit: 82,095 yen
Win rate: 31.73%
Profit factor (gross profit / gross loss) = 1.29
No take-profit setting
Stop loss: 30 pips
Position hold time setting none
Trend filter not used
Over the same period, using pyramid increases results by more than five times, doesn’t it?
Average winning width 73.1 pips and average losing width 26.4 pips with a 30% win rate means, on average, about +20 pips across three trades.
When pyramid is used, the win rate decreases, but the 30-pip stop loss per position remains unchanged. When positions are being added, the trend is generally present, so you feel you are increasing total unrealized gains while placing new trades.
However, if the opposing new-entry conditions are met, then it becomes a buy or sell in the opposite direction at that moment.
As shown above, adopting the pyramid method also seems worth a try.
By the way, our forward testing MACDPlusEA has been upgraded, and in addition to the previous trend-following, it will now be used together with a contrarian EA.
The image below shows the equity curve when combined trend-following and contrarian strategies are used.
Trade data for USDJPY 1-hour chart from January 2013 for four and a half years.
Trading lot: 0.01
Number of trades: 661
Net profit: 47,539 yen
Win rate: 75.64%
Profit factor (gross profit / gross loss) = 2.01
Maximum take profit: 200 pips
Maximum stop loss: 50 pips
Maximum position hold time: 24 hours
Trend filter used
The following pages show data for trend-following only and contrarian-only data as well.
http://mt4ea.xn--fx-ub3cv5cl7g3owpigi32c4qeh71e.jp/?p=250
We will continue to improve the MT4 MACDPlus EA as well.
After August 1, please email us with the order ID and the name of the product you wish to receive as a gift, along with the product ID and price,
As you can see, using new indicators and EAs for verification collects a variety of data, and we will continue to incorporate this into future updates of each product and new product development.
Until enough data is accumulated from various angles, we will continue developing new products.
Gifs of diagrams used in the blog and MT4 test reports are also available for free download as much as possible.
This set also includes the images from this article.
Free download of blog images, MT4 reports, etc.
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