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In this article, we will talk about the general requirements for profitable trading systems. The article consists of the following topics:
  1. Creating a logical and symmetric trading algorithm.
  2. Getting the high quality history data.
  3. Backtesting of the system.
  4. Optimization.
  5. Forward testing.
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NAG avatar
NAG 9 Sep.

сколько информации))мой переводчик чуть не взорвался))класссссссс!!!!

ElizavetaKl avatar


Illya avatar
Illya 10 Sep.

Nadin5794  Примерно все так и есть! Особенно когда ты трейдер со стажем!))) Но новичку нужен алгоритм действия! Иначе ему придется пройти поле граблей самому! Куда проще усвоить простые и понятные правила, когда они уже обличены в руководство к действию!)

AloneVolf avatar
AloneVolf 13 Sep.

Отличная статья для новичков. Полностью согласен. Только я бы сделал акцент на обязательности живого тестирования, которым многие (да и я в начале) пренебрегают. Так же просьба к автору по возможности давать статью и на языке оригинала. Думаю не все ее поймут на английском

Illya avatar
Illya 13 Sep.

AloneVolf  Спасибо за отзыв! кстати ссылка на переведенную статью

orto leave comments
In my previous article i have shown you a strategy based on MACD & stochastic oscillator. This strategy is one of the best strategy present in the library. Lets automate it and see
is this is a profitable strategy or not?
So lets start building the strategy first.

STEP-1 Beginning

1. Periods + Instrument Selections
2. Position Limiting Block
Take a look at the Figure-
STEP-2 Indicators

1. Macd

As from figure to Open a trade we have to look at the slope of macd.
is it upward or downward? To know we have to think about simple maths. we need three last histograms to be
Uptrend- "up down up"
Downtrend- "down up down"

See the Figures
hence it is confirmed that we have require the past three histogram data which is given by
MACD(Shift1), MACD(Shift2), MACD(Shift3)

2. Stochastic

A simple Stochastic of default period with shift-1
This is how it looks like-
STEP-3 Opening Orders
1. In the figure, The left hand portion is for opening Sell order and Right hand portion is for open Buy orders.
2. We have used 3 macd hence to Open a position we have to use same down up down strategy for opening Short position and vice versa for a long position.
3. Stochastic is default as crossover, if it …
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FXRabbit avatar
FXRabbit 17 Jan.

Good effort!

Elani avatar
Elani 18 Jan.

Will wait for your next article!

TInna avatar
TInna 19 Jan.

информативно, молодец)

mcquak avatar
mcquak 19 Jan.

Thanks for your effort, it's beneficial for readers to know, how the "article" can be melted in some automated strategy. However I'd be cautious to claim that it's profitable strategy based on back testing result of one month.

brilliant avatar
brilliant 25 Jan.

worth further examination .thanks

orto leave comments
Congratulations my dear fellow FX Trader. So you’ve found nice strategy with perfectly looking candlestick charts somewhere on the internet and you are about to hurry to trade it, right? Calm down mate and try to think about what I’ll try to write about here.

Why instant back testing
Do not worry, I won’t try to sell any strategy to you, because on the internet there exist so many strategies perfectly looking at the first glance, so I can’t compete in that regard. My last article was about R, and this one preserves the topic.
Please let me unrelieved some tool to you that can be used as almost instant back testing and verifying helper of any strategy you can imagine unless it’s based on technical analyses.
From longer time perspective I guess that vast majority of strategies usually turns out as poorly profitable or even loss-making. I guess that almost all traders can easily lost many days, weeks, and even months by forward testing some of these newly discovered trading strategies before become apparent that it behaves differently than it was looking at the beginning. And that’s not only time what one could lose regarding it but also money. No one is trading to lose money right?
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Mariia avatar
Mariia 7 Dec.

well done!!!!

Methodman avatar

Good job mcquak! I can't give me a try to R, because I'm a Matlab fundamentalist ;)

foreignexchange avatar


taimasik avatar
taimasik 20 Dec.

was interesting to read! thank you!

yascom avatar
yascom 19 Oct.

Thanks but I am not able to run the code on 5 minute candlestick data download from Dukascopy. Is there any change required on the csv generated by Dukascopy's data download?

orto leave comments

Back in March when I posted the results for one of my simple systems, there was a lot of disbelief. How can such a simple system possibly work? If there’s no logic behind the strategy, then it can’t be profitable. You must’ve curve fitted the data somehow. These are just some of the comments I got when I posted this simple trading strategy.
In this article I will provide an update that shows how the system performed this year. I will also go over the process you should undertake to evaluate trading strategies and the steps needed before including a system in my trading arsenal. But first, a brief recap of the system and the backtested data.
Simple Set and Forget System for EUR/JPY
The rules for this set and forget system are very simple. It’s a weekly breakout strategy. After the markets open on Sunday at 23:00 CET (17:00 EST) we wait for the first 4 Hour candle to close. This happens at 3 AM CET on Monday, or 9 PM EST. If your broker has different 4 Hour settings, just use the hourly chart and draw a breakout box from 23:00 to 03:00.
For longs:
Place a Buy stop order at the high of the 4 Hour breakout box + 20 pips (+2 pips added for the spread)
For shorts:
Place a Sell st…
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CriticalSection avatar

I didn't realise 'naysayers' was a dictionary word in the capital markets. I spent 4+ years investigating market behaviour and micro-structure referring to absolutely no one even remotely involved in trading.  Always trust your instincts and if those fail, you still have your own eyes :) Good job with the article!

driven avatar
driven 2 Oct.

Very interesting article. It does seem though that you have a very small margin for error here. You did 125 trades and needed 25:100 win:loss to break even and you got 28:97, well within the realm of random variance. Also, you have to account for the fact that you need more than a 1:4 ratio to allow for the occasional slippage and black swan event (where your risk is asymmetric) which weren't in the backtesting. Not to say this system can't work, but you either need a much larger sample or a much higher win:loss ratio to make a strong case for it. Maybe with more testing. High quality article!

Natali_Niyazova avatar


VictoriaVika avatar

very very very very good article. Tres bien, excellent &  дуже гарно

orto leave comments
Since many people have inquired me about my newest strategy that I've started running in the Strategy Contest since last month I thought it's best to write an in depth article that can be useful especially for guys who are still beginners with Visual JForex and secondly it will be useful for those who want to understand better the ins and outs of my strategy and answer question like why I choose to run the strategy only between some specifics hours and not let it run without interruption.
Since I'm an advocate of keeping things simple as possible, building up my strategy it will be quite easy even for a novice. But don't worry this article will guide you step by step on how to build up the strategy. The process of creating a strategy is what Dukascopy likes to see, so that was the main reason why I've decided to write this article.
By now I'm sure you must be intrigued by the article title, you may think it sound to good to be true, however the backtesting results show this strategy has generate in excess of $0.8M profits since beginning of the year. It has posted profitable month after profitable month with just one exception, the month of February, wh…
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Daytrader21 avatar

marius24 LOL... Thanks bro.

Jignesh avatar
Jignesh 29 June

Nice article, and good explanation of your strategy.  Wish you the best!

Daytrader21 avatar

Jignesh Thank you for your support

Gannforex avatar

"Even thought it has a large SL this is compensate by the higher profitability rate as it has a profitability rate of 98%. " This does not compensate though. "Secondly it's best not to run the strategy during Asia session, you're going to be wiped out. " or any other time. Have you found a solution to this yet?

Daytrader21 avatar

Gannforex Unfortunately I haven't spent any time to optimize the strategy as I was busy with other stuff. I only crated this strategy because of the Strategy Contest. I know that for the most of the time the strategy will lose, but I'm waiting for that one month when the market will be in a strong trend than for sure my strategy will yield a nice profit. and last thing lets remember that EUR/USD has been moving in a range in the past year.

orto leave comments
There is no mystery that the world is full of patterns and we're governed by them and the financial market are not exception of this rule. The time element such as the time of the day could also play a big role in how certain FX pairs may behave. There is an empirical research conducted by major institutions which suggest that there are strong evidence of a predictable time-of-day pattern in FX. This research was conducted by Angelo Ranaldo from SNB.
The main idea behind this article will be to turn a simple trading pattern backed up by an extensive empirical research into an automated trading system using the Visual JForex platform.
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Metal_Mind avatar
Metal_Mind 25 Apr.

Even though i disregard automated strategy i can say this is one excelent article , with a lot of details  and highly qualitative. Good luck !!!

Mani avatar
Mani 26 Apr.

good job

Faster avatar
Faster 26 Apr.

well done

Daytrader21 avatar

Metal_Mind  Automation has its advantage and disadvantage, it's up to the trader which route decide to goes.

demomailru avatar
demomailru 20 Feb.

"Click on Figure to Enlarge" does not enlarge images for some reason!

orto leave comments

Not more than 3 months ago I've been writing an article about how you can trade the 4:00PM London Fix, giving out an easy step by step guide on how to profit from the price action around that time. You can read more about it here: London Fix Strategy
In this article we're going to make one step further and automatize the whole process by using Dukascopy Visual JForex. This will be one of those strategy that will require no indicators and I'm going to use some of the blocks that I've already been using them in my previous article, and you should be already familiarized with them. I like to keep things simple so in this regard even if you don't have any programming skills whatsoever you will be able to understand the whole process.
Lets proceed first by giving a short summary of our strategy:
  1. Currency pair: GBPUSD;
  2. Time Frame: 1h;
  3. Target= 16 pips. Since beginning of the year the average pips volatility at 4:00PM was around 16.6 pips (see Figure 1);
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MobNaga avatar
MobNaga 13 Oct.

Nice work. FYI, Counter strategy (for GBP/USD) is good between 17 - 25(LondonTime) in last 10 years.

Likerty avatar
Likerty 23 Oct.

I'm sceptical about historical testing of volatility based trading systems as trading already formed candles and ones - still in the making (real-time) produces very different results..

Jignesh avatar
Jignesh 25 Oct.

Congrats Daytrader21 on finding a strategy and automating it, not an easy endeavor.

Daytrader21 avatar

MobNaga Thanks for the info I'll check that out. Likerty So far I've seen big difference between the backtesting results and what I get in real-time environment. Jignesh Thanks buddy.

Stix avatar
Stix 31 Oct.

Interesting and useful Article. Thank you very much. :) :)

orto leave comments

This article will help people who are new to Visual Jforex when testing/developing a strategy. It explains the following:
  • How to set up variables that can be easily changed after the strategy has been built.
  • How to view Vjfx strategy source code & test a Vjfx strategy in Jforex.*
*In my experience, Jforex backtesting is faster. It also allows for multiple charts and provides a trade report (showing individual trades) at the end of a backtest.

How to set up variables that can be changed after the strategy has been built.

(All images can be enlarged by clicking on them.)

Global variables are variables that can be changed after the strategy has been built, without the need to go back and edit the strategy. They are very useful during testing or if you need to make regular adjustments to the strategy.
When a strategy is executed a window will appear. Every strategy starts with 6 default global variables. If it is run in Visual Jforex it will show a "Global Variables" window. If the strategy is run in Jforex it will show the "Define Parameters" window:
The “defaultPeriod” variable indicates the timeframe on which an indicator runs, i.e. Simple Moving Average on Hourly timeframe.
As yo…
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piter44 avatar
piter44 30 Sep.


Fxtrader500 avatar

Thank you to everyone for your support and comments.

honamkts avatar
honamkts 31 Oct.

good luck this month

JanHetzer avatar
JanHetzer 20 Nov.

good job , please do some more articles!

anasm87 avatar
anasm87 4 May

good articale

orto leave comments
I have been trading for about 4 years. This is my first article for the contest. I would like to share some of my trading experiences and lessons I have learnt. Part 1: My first trade. I discovered forex trading while searching the web for something related to economics. I had no idea how to determine when or what to buy or sell but I knew that it was something I wanted to learn more about. I opened a demo account, spent a couple of minutes exploring the platform and started experimenting with different indicators. After a while I found a linear regression tool and used it to determine that the trend was moving down for EUR/USD. I opened 3 sell orders and after about an hour the demo account was up around 10% from those trades. An example of linear regression in JForex using an indicator from the JStore. My first trades were based on a similar situation to the one shown above. (Click to enlarge image) Even though I didn't really understand why those trades won, I was excited and told my friends and family about trading and how I thought I could make a lot of money from it. They didn't seem to think much of it. Nevertheless I knew I had to learn more about forex trading.Part 2: …
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Erialda avatar
Erialda 31 July

Thank you , by remembering me old memories of my past ...

Erialda avatar
Erialda 31 July

Good article, and good luck

Daytrader21 avatar

Good one, wishy ou many pips

alifari avatar
alifari 31 July

Well done +

Fxtrader500 avatar

Thanks everyone!

orto leave comments
On my previous article I presented a short-term strategy based on inside bars, which used a time-based exit, instead of fixed stop-loss and take-profit orders. Some community members suggested a few changes to it, including the inclusion of a fixed stop-loss, which I did his time, let's see if it improved the system's profitability. _______________________________ ► Different types of stop-losses Trading without any kind of stop-loss is asking for trouble, period. Sooner of later there will be a trade that will never return to its entry price, and will keep on going against you until your account is destroyed. However, stop-losses come in different flavors: You have the typical fixed price-based stops, which never change. Manual or automatic trailing stops, which follow the price as it moves in your favor, thus locking more and more profit (or reducing the loss until breakeven point). And then there's time-based stops, in which the trader manually closes the trade (or the platform does it if it has been programmed that way) after x number of periods/candles. My original "inside day strategy" uses time-based stops, so even though it looks like it does not have stops, …
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ELENA_M avatar
ELENA_M 26 Feb.

useful article, we always have a choice in SL changing

DumbAsArock avatar

I wonder how this would work with Di Napoli levels? +1

doctortyby avatar
doctortyby 28 Feb.

So it seems that you have powerful role models to base on ;) I must admit that this article is not as near as interesting as the first one... Anytime the exit is much more important than the entry

SpecialFX avatar
SpecialFX 28 Feb.

Yeah, I see your point doc, I actually only wrote this article because there were some comments on how the inside day strategy would eventually work with a fixed stop loss, so I tested it, the only way we can be sure of anything is by extensively testing it :) This article is basically an extension of the first one.

Sergei2 avatar
Sergei2 8 July

Hi SpecialFX, great article! I understand you consider a candle an "inside one" if it's high/low are withing the previous high/low. - But tell me, for this strategy - do the body (open-close) also needs to be within the previous open-close? Awaiting for your reply with great interest!

orto leave comments
Every trader should automate their trading strategy. This is especially true for new forex traders given the low barriers to entry in the market and the generous amounts of leverage available. The process of developing an automated trading strategy has numerous ingrained benefits for traders that can help avoid making costly mistakes that are typically associated with the shortening of a trading career.Reason #1: Development of a Trading PlanA key to success in trading is to have a good plan and to have the conviction to stick with your plan over time. The basic tenet of a trading plan is to know exactly how you will act throughout the entirety of a trade before you place your initial entry. Often times, traders will bend this definition of a trading plan, allowing for some discretion throughout a trade. This is not beneficial to a trader because this level of discretion means that you cannot reliably backtest your strategy. By automating a trading strategy, the trader is forced to define exactly how each trade will progress. As such, by choosing to automate a strategy, you are more likely to be testing and trading a complete plan.Reason #2: BacktestingWhile it is not necessary to …
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madiha avatar
madiha 2 May

good luck

RobertBric avatar

Unfortunately (or maybe fortunately) not every strategy can be automated. Discretionary strategies cannot be automated (for example classical pattern or Elliott Wave trading). Or should I say: cannot be automated well. Because such programs already exist but they mostly provide signals for traders to decide upon.
One point where I don’t agree. I believe that novice traders should trade manually as much as they can in order to gain experience. With a demo account, of course. Only then can they go and define an automated strategy.
All the very best with future articles in the contest

doctortyby avatar

I think there is no strategy that could work in different market conditions. Some strategies work sometimes, other strategies work in other market conditions and some strategies never work. :) But there has to be a strategy otherwise the trading becomes gambling and that means coin flipping. Keep it up and trade well my friend.+1

alifari avatar
alifari 19 May

I use both automated & manual strategy, but I feel automated strategy is less stressful +1

orto leave comments