Backtesting Popular YouTube Strategies #4
50_EMA — Wick Rejection Strategy
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👋 Hello group 👋
As some of you requested, I will resume my Backtesting YouTube Strategies series, and I will try to be more consistent and post regularly newly tested ideas.
For the newcomers, I have developed my own Backtester in Python, using the backtraderpackage and I use it to test popular and complex trading strategies from YouTube. That way you can receive real and transparent results and not some handpicked situations which support the presented idea.
You can check some of my previously backtested strategies:
Strategy Rules
Okay, so today's strategy is from the YouTube channel: Trade Pro, if you want you can check the video here.
The rules for entry are pretty straightforward:
- For Long: The price has to be above the 200-Day moving average and the low wick has to cross below the 50-Day moving Average and on the next candle to be above. So some kind of bouncing from the 50MA.
- For Short: The rules for short are the opposite. Price below the 200-Day moving average and the high wick to test and bounce off of the 50-day MA.
The stop-loss and the take-profit are as follows:
- Stop-Loss: we will be using the 14-period ATR with a multiplier of 1
- Take-Profit: it will be a 1:1.5 Risk:Reward ratio
Okay, let’s jump into it
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Backtesting
As per the video, the backtest will be conducted on the EURUSD pair in the 15M timeframe. The backtest will be done over the last year.
The Results
The below graph shows the statistics from the backtest
As we can see over the last year the strategy lost cumulatively 5.2%, which is obviously not what we are looking for. What’s more, the Share ratio is -1.13 which we can consider unacceptable. One, let’s say “okay” thing is the 6.8% Drawdown which I can say is not too bad.
However, at the end of the day, the strategy lost us money. I will leave the conclusions to you.
⚠️If you want to check how to approach an algorithmic trading strategy as a professional you can check my partner's YouTube channel, where he develops various quant strategies with Python and backtest them in front of you. The latest one is based on trading the Twitter Sentiment. Go ahead and check it out.⚠️
Also, I would love to hear your thoughts on the strategy we tested, or on algorithmic trading in general.
Do you use bots for trading or have you ever considered it?
Share in the comment section below :)
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