Create an EA to validate the effectiveness of "RCI3 Three Lines + BODSOR" (1)

※BODSOR is an indicator developed to improve the entry accuracy when using the RCI 3-line method for buying on dips or selling on rallies.



In the case of EA, backtests and forward tests are used to demonstrate its effectiveness with concrete numbers, but
how should the effectiveness of the indicator be shown?

Here,“RCI 3-line + BODSOR” was tested with a dedicated EA to illustrate its effectiveness with concrete numbers.


(The results below are only an example…)


Overview of the EA

Currency pair: Not disclosed
Time frame: Not disclosed
　Entry conditions: Determined from RCI and BODSOR only(Details are not disclosed)
Lot size: 0.1 lots (fixed)
TP: 105 pips (fixed)
SL: 15 pips (fixed)
Other (settlement-related): No breakeven or trailing stop settings
Spread: 1 pip (fixed)
Trade direction: Sell only
Number of positions: No limit


Backtest results (Period: 2007-01-01 to 2018-07-31)





Period: 2007-01-01 to 2018-07-31

Total trades: 482
Profit factor: 1.63
Net profit: 3,735.71 USD
Maximum drawdown: 538.41 USD
Expectancy: 7.75 USD (7.7 pips)
Average trade duration: 1 day


Entry conditions are determined fromRCI andBODSOR only, yetthe profitability
factor is 1.63 and yields good results. Considering that no other indicators were used at all,
this example suggests that the“Combination of RCI and BODSOR” is very effective.
Because TP (= 105 pips) is 7 times SL (= 15 pips),

a high risk-reward ratio setting yields such favorable results. Therefore, from this backtest,
the combination of “RCI and BODSOR”
is highly effective at catching times when price moves strongly in one direction
.This is what we believe.

Note that the above example shows anaverage trade duration of 1 day, indicating that this is not a so-called scalping.
Also, the

expectancy is 7.7 pips, so the test conditions are such that the impact of spreads is limited.




Using RCI 3-line to buy on dips or sell on rallies
to improve entry accuracy, an indicator was developed


Twitter
https://twitter.com/RCIX3Line

Blog
http://bodsor.blog.fc2.com/