Strategy testing, part 3
New-ish trader here. I'm testing a strategy to see if it works with ForEx. So far, it's worked well applied to crypto, but in stocks it generated more fees than gains. It seems the next market to try is foreign exchange. The strategy is as follows:
Side: Long Positions Only
Volume: ~1% of margin per day
Frequency: One trade per line per day
Buy Signal: Spot Price < Weighted Average Basis of holdings
Sell Signal: Spot Price > Weighted Average Basis of holdings
The idea is that I can either lower my average purchase price if prices are declining, and sell at a profit if increasing. Also, by trading small amounts I can hold even if prices keep declining over a period of weeks.
I picked EUR/USD because it has the highest volume, and USD/CHF because it has the highest negative correlation with EUR/USD, according to myfxbook. In theory a USD/CHF long will increase in value with the dollar, and a EUR/USD long position will gain value as the dollar decreases.
It’s perhaps a bit unscientific, compared to other ideas on this site. Still, it seems possible that it can generate consistent gains. There’s still probably a lot I don’t know about markets, so advice would be appreciated.
Side: Long Positions Only
Volume: ~1% of margin per day
Frequency: One trade per line per day
Buy Signal: Spot Price < Weighted Average Basis of holdings
Sell Signal: Spot Price > Weighted Average Basis of holdings
The idea is that I can either lower my average purchase price if prices are declining, and sell at a profit if increasing. Also, by trading small amounts I can hold even if prices keep declining over a period of weeks.
I picked EUR/USD because it has the highest volume, and USD/CHF because it has the highest negative correlation with EUR/USD, according to myfxbook. In theory a USD/CHF long will increase in value with the dollar, and a EUR/USD long position will gain value as the dollar decreases.
It’s perhaps a bit unscientific, compared to other ideas on this site. Still, it seems possible that it can generate consistent gains. There’s still probably a lot I don’t know about markets, so advice would be appreciated.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.