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Forex Forum → Forex Strategies → Help Needed to write a strategy on FSB

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Topic: Help Needed to write a strategy on FSB

Hi I have found a simple strategy that seems to be very effective but I don't know how to backtest it.  Basically, it tries to capture a retracement in an established trend and then jump into the break out back in the trend.

Here it is:

Time frame: daily
Currency pair: any
Trading setup: SMA 150,
RSI (3) with horizontal lines at 80 and 20,
Full Stochastic (6, 3, 3) with horizontal lines at 70 and 30.

Trading rules:

Entry for uptrend: when the price is above 150 SMA look for RSI to plunge below 20. Then look at Stochastic - once the Stochastic lines crossover occur and it is (must be) below 30 - enter Long with a new price bar.

Opposite for downtrend: when the price is below 150 SMA wait for the RSI to go above 80. Then if shortly after you see a Stochastic lines crossover above 70 - enter Short.

Protective stop is placed at the moment of entry and is adjusted to the most recent swing high/low.

Profits are going to be taken next way:
Using a trailing stop - for an uptrend a trailing stop is activated for the first time when Stochastic reaches 70. A trailing stop is placed below the previous bar's lowest price and is moved with each new price bar.

Thank you

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