Most traders are obsessed with finding the best trading strategy, they will spend large sums of money, invest huge amounts of time pursuing the proverbial pot of gold and in many instances over engineer the solution.
My late father always preached to me – the KISS principle (keep it simple stupid)!
What if I said that I had a great strategy that is profitable over the last 20yrs and beats the market on a relative basis as well.
What if I said I will share all this with you for free.
What if I said it is so simple that you don’t need any coding experience you can implement it right now with no fuss.
I am sure those of you reading this are saying not possible, this is too good to be true, unbelievable.
There is good news I am about to share it with you.
I have taken a simple 200 day moving average and when the price of the currency crosses below the moving average I short the currency. If the currency crosses above the 200 day moving average I go long. Its that simple, lets take a look at the results.
I have included a visual of how the strategy looks on a chart for your ease of reference. I have just chosen one symbol GBPEUR for the illustration.
The code I have used is as simple as this. You can easily trade this by just visually looking at the 200 day moving average.
strategy(“Moving Average Long Cross”, overlay=true, initial_capital=10000, currency=’USD’)
fromYear = year > 1998
toYear = year < 2019
longCondition = close > sma(close, 200)
if (longCondition and fromYear and toYear)
strategy.entry(“Long”, strategy.long, 10000)
shortCondition = close < sma(close, 200)
if (shortCondition and fromYear and toYear)
strategy.entry(“Short”, strategy.short, 10000)
The bottom line is that despite me presenting you with a great profitable strategy that has stood the test of 20yrs of time, probably none of you will trade it. Why?
The reason is twofold:
The primary reason is that it requires you to take a long-term view on the markets. The second reason is that it has a very low win success rate under 15%.
How many of you would be prepared to ride out a long-term strategy that consistently makes money over the long term but spends a large part of the time losing money? Can you psychologically handle it?
The strategy is a long-term trend following system that makes its money by catching a few BIG Waves that it rides all the way. Unfortunately, most of the time trading this strategy no great opportunities present themselves. However, it requires you to participate in all opportunities as you never know which one is going to be the big one.
I think its vitally important when you start out trading to be honest with yourself and decide what is the time frame of the trading strategy you have chosen. Decide if you want to know if it is working after hours, days, weeks, months or year and in our case perhaps decades. I recommend you write it down somewhere that is visible to you without much fuss. Perhaps on your wall near your trading station, or in your journal.
All the best in discovering the time frame that works best for your trading strategy. Once you have discovered it, try your best to respect that discovery.
The PsyQuation Team.