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Posts: 4

Topic: How to Test This Strategy

Greetings,

Can anyone tell me if it is possible to test this strategy:

EUR/USD

4H chart with RSI
1H chart with 5 and 28 EMA

Long when RSI crossed above 50 AND 5 crosses above 28

Target take profit 30
Stop Loss 25

Thank you.

2 (edited by forexer 2007-08-20 18:35:44)

Re: How to Test This Strategy

There are no problems:

Market: EURUSD 4 Hours   <--- 4 Hour chart

A same direction signal - Does nothing
An opposite direction signal - Reverses the position

[Opening point of the position]
Bar Opening
     Enter the market at the beginning of the bar
     Base price  -  Open

[Opening logic condition]
RSI
     The RSI is higher than the Level line
     Smoothing method  -  Simple
     Base price  -  Close
     Smoothing period  -  14
     Level  -  50
     Use previous bar value  -  Yes

[Opening logic condition]
Moving Averages Crossover
     The Fats MA crosses the Slow MA upward
     Base price  -  Close
     Fast MA method  -  Simple
     Slow MA method  -  Simple
     Fast MA period  -  1  <--- Scaling  5 / 4 ~ 1
     Slow MA period  -  7  <--- Scaling 28 / 4 = 7
     Fast MA shift  -  0
     Slow MA shift  -  0
     Use previous bar value  -  Yes

[Closing point of the position]
Stop Limit
     Exit at Stop Loss or at Take Profit level
     Stop Loss  -  -25
     Take Profit  -  30


or:

Market: EURUSD 1 Hours   <---1 Hour chart

A same direction signal - Does nothing
An opposite direction signal - Reverses the position

[Opening point of the position]
Bar Opening
     Enter the market at the beginning of the bar
     Base price  -  Open

[Opening logic condition]
RSI
     The RSI is higher than the Level line
     Smoothing method  -  Simple
     Base price  -  Close
     Smoothing period  -  56   <---  Scaling 56 = 14 * 4
     Level  -  50
     Use previous bar value  -  Yes

[Opening logic condition]
Moving Averages Crossover
     The Fats MA crosses the Slow MA upward
     Base price  -  Close
     Fast MA method  -  Simple
     Slow MA method  -  Simple
     Fast MA period  -  5
     Slow MA period  -  28
     Fast MA shift  -  0
     Slow MA shift  -  0
     Use previous bar value  -  Yes

[Closing point of the position]
Stop Limit
     Exit at Stop Loss or at Take Profit level
     Stop Loss  -  -25
     Take Profit  -  30

3 (edited by Dreamliner 2007-08-20 15:05:06)

Re: How to Test This Strategy

Thank you. Does this take into account that the moving averages use the 1H chart instead of the 4H chart? I did not see that in your logic below. Thank you.

forexer wrote:

There are no problems:

Market: EURUSD 4 Hours   <--- 4 Hour chart

A same direction signal - Does nothing
An opposite direction signal - Reverses the position

[Opening point of the position]
Bar Opening
     Enter the market at the beginning of the bar
     Base price  -  Open

[Opening logic condition]
RSI
     The RSI is higher than the Level line
     Smoothing method  -  Simple
     Base price  -  Close
     Smoothing period  -  14
     Level  -  50
     Use previous bar value  -  Yes

[Opening logic condition]
Moving Averages Crossover
     The Fats MA crosses the Slow MA upward
     Base price  -  Close
     Fast MA method  -  Simple
     Slow MA method  -  Simple
     Fast MA period  -  20  <--- Scaling 5 * 4 = 20
     Slow MA period  -  112  <--- Scaling 28 * 4 = 112
     Fast MA shift  -  0
     Slow MA shift  -  0
     Use previous bar value  -  Yes

[Closing point of the position]
Stop Limit
     Exit at Stop Loss or at Take Profit level
     Stop Loss  -  -25
     Take Profit  -  30

4 (edited by forexer 2007-08-20 15:14:53)

Re: How to Test This Strategy

Ops! I found a mistake and I have corrected my previous post. smile

I'll explain more:

You want to use two periods - 1hour and 4 Hour charts, but FSB can load only one data set at a time.
The solution is scaling of the indicators parameters.

There are two variants:

1. trading on 1Hour chart -
In this case load 1H data and scale the indicators as follow:
RSI(56)  because of  ( RSI(56) 1H is equal to RSI(14) 4H     56 = 14 * 4)
Use normal MA(5) and MA(20)

2. trading on 4Hour chart
Use normal RSI(14)
scale the MA as dividing the period by 4
MA(1) or MA(2) (5 : 4 ~ 1) and MA(5) ( 20 : 4 = 5 )

Is it clearer now?

The idea is that we can load a shorter data set and multiply the indicator parameters to compensate the difference.
This can be use for tests, but you have to know that you cannot expect equal results because of the gaps between the bars. Also some indicators as "Stochastics" that counts the bars can show different values.

If problems, ask further.
Have fun!

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