Poseidon is an offspring of famous Donchian Channel and Turtle Trading Strategies. It is a trend following strategy aiming to capture a trend and not letting it go until trend fades.
I have working on this strategy for a while and I published two award winning articles regarding my strategy. Please click on them to read them.
1) Poseidon Strategy Rules and Test Results
2) Simple Money Management and Poseidon Test Results Revisited
In this article I will continue my award winning series and I will introduce simplified rules for Poseidon, deliver Visual JForex files i developed and share my 10 year long test results for EURUSD.
1. DEFINING TOOLS OF POSEDION
1) 20 days’ Average True Range
2) 55 days’ highest high and 55 days’ lowest low are the only three information we will use to setup this strategy.
I simplifed my rules. I do use fixed values to determine my stop as will be explained below.
The motto of the strategy is to buy high to sell higher, sell low to buy lower.
1.A. RULES OF ENTRY
-BUY if Price breaks above 55 days’ highest high. We will buy when the Price gets one tick higher than the 55 days’ highest high.
-SELL if Price gets below 55 days’ lowest low. We will sell when the Price gets one tick lower than the 55 days’ lowest low.
*I use daily pending orders which are opened and closed at the end of the day. (10 GMT)
1.B. RULES OF EXIT
i) Exit without profit
- Stop Loss uses 0.5* ATR distance. Now i use fixed 70 pips as stop loss as i developed simplified rules.
This is the entry stop loss. If it is hit, we will wait another day to enter a new pending order. The new pending order will use latest highest high or lowest low.
ii) Exit with profit
- Trailing Stop uses 1.5* ATR distance. Now i use fixed 150 pips as trailing stop as i developed simplified rules.
Since this is a trend following system, I do not place any take profit target and letting the momentum ride as far as it can.
2. TEST RESULTS
Here is the Visual Forex File (please click on this writing to get the file) in JForex Historical Tester. It can be slower but tick data is used for accuracy.
Testing Period is between 01.01.2006 and 01.01.2016. 1 fixed lot (100.000 lot size) is used for every trade. Starting capital is 50.000$. Here are the results;
3.A Starting capital of 50.000$ turns into 360.000 USD in ten years. This means %72 yearly return. This is especially good because capital is in small time periods and let's you use your capital combined with other strategies.
3.B As you can see equity line is constantly raising and drawdown is regular. This means strategy worked in different market conditions in the timespan of 10 years. This also dictates that strategy is solid and will probably continue to survive.
3.C As you can see below, Poseidon is a simple, profitable trend following strategy. Since Poseidon tries to catch big moves occurs once or a twice year, it is percentage of winning is low. However, once it catches the move, it covers all the losses and leaves additional profits.
In the graph, you can observe that Poseidon grasps 999 pips profit and takes losses five 70 pips. Then claims 512 pips and losses a little. then get another 192 pips profits and another 449 pips profits.
This means strategy is extremely profitable but get ready to lose 350 pips to earn 2.000 pips and more.
I am waiting for your comments.
Here is the Visual Forex File (please click on this writing to get the file)