Here are the .mht results for the GBPUSD 15 minute BBextension (for the last 8 months).

My methodology was as follows:

Enter on a 2nd confirmed candle of the BBbar (or at market if past BB price).

Exit on the following 1) a stop loss of 60 pips, 2) 2-3 MACD reversals have occured (only 1 reversal per MACD cycle counts), 3) 1 or 2 reversal dots have occured.

Some things of note: 1) April and October were by far the best months with an average of about $7k per contract per month. The average month is much lower - only about $3K per contract per month. The worst full month was January with only $800. Obviously it is important to maximize on the profits of this system when trends are strong (ie. in April and Oct). Also please note that the average time held was 22 hours for a winning trade and about 8 for a losing trade.

Lastly, I will continue doing similar testing with the other currencies and with the MACD dots and BBreversal dots. Please bear in mind this is fairly time consuming as each entry requires its own strategy (and there were about 80 trades for this one alone).

Thank you for the time and effort you are putting into the tests. Very, Very helpful.

Cody

Here is a copy of the workspace for the GBPUSD 15 min BBext. Please remember that I'm using Pacific Standard Time - if you are not PST you will need to change your time format to PST to see the file as its supposed to be. Thanks.

Edward,

Can you post a chart or two showing an entry and exit? How do you decide how many MACD cycles or reversals before you exit your position?

Phil

Phil,

O.k. here are some examples and why I exited.

The first example shows a trade taken during a strong trend. Essentially, after the reversal of the first MACD which happens within the first 5 bars I assess the market to determine if it is trending or not. If it very clearly trending as is the case with this trade, I remain in the trade. Every time a MACD reversal or reversal dot occurs I revaluate the market and determine if I still want to leave the trade open. In this case I could have exited after the 2nd MACD reversal (reversal dot) but I saw the trend as being very strong here so I waited for the 3rd reversal dot (which is where I exited). Obviously this would have taken several days to occur.

Another way that I can exit a trade is at a stoploss. This is pretty straight forward.

A couple of things to note on this one is that the first trade did not execute for about 20 bars (hence a confirmation is needed). Secondly, I consider another BB extension in the same direction as a different trade and hence the MACD reversal count starts over.

In this one we see the BBextension in a choppier market. You might ask why I exit on the 2nd MACD reversal instead of waiting for a 3rd. The reason is that white dot - if we were in a trend the white dot should be against the market not with it and if that white dot were a superdot or red dot then we might be a trending market. Hence the early exit.

Everyone who's read Van Tharp or has traded awhile knows the bias of the "well chosen example" and its one of the reasons I hate cherry picking examples like this. The reason is that as people we tend to have a bias to see patterns even when they are not there - or not perfect.

This trade shows the fallacy of the well chosen example - you can see that I exited on the 2nd MACD reversal (right before the market fell back in the opposite direction). Now since I did choose this exit sight unseen (candle by candle backtesting), I consider it valid, however, since the market was trending I could just have easily waited to exit on the 3rd MACD reversal and had a small loss. Why did I exit early - I really don't have a mechanical reason for why I exited. I can only assume that hundreds of hours of seeing these patterns imprinted on me an impression that it was time to exit the trade.

Needless to say it could just have easily been a loss. It also highlights that this exit system is in no way perfect and there will be times when profits will/may not be taken even in a winning trade. Hence beware the well chosen examples and please look at the .tsw yourself and do your own analysis on these trades. Thanks and please let me know if you have any questions.

Edward,

I can't thank you enough for the hard work you've done here. I personally know how difficult it is to stay objective and advance your charts 1 bar at a time. I also know how tedious it is to enter all of those trades. Thank you for sharing your results and the workspace. That is very generous of you.

For me, one of the most significant things you pointed out was how long the average winner and loser lasts. I think it's important to enter a position with some idea of how long you can expect that trade to last.

I uploaded two indicators to the TS indicators section that you might find of use:

1. PL indicator will show profit/loss of each trade right on the chart
2. ADX/DMI indicator. It "might" provide an objective indication of a strong trend and allow you to ignore a reversal signal.

Again, thanks for your work!

Phil

I'm glad that you've found this helpful and hopefully it helps others too. I have to admit I also find it to be a very instructional exercise and recommend it to anyone else who has the tolerance to go through it. You will definately learn some things. I know I did.

Also thanks for the indicators (I particularly like the P/L indicator idea very cool).

Nice work Edward! I agree that backtesting really helps. You gain confidence in the system and what it has to offer! It helped me establish someplace to start with SL and TP and I was also able to recognize patterns. Did you notice a difference in the performance in the summer months? I did for the Euro and Swissy but the Pound was only off by a little. Joann

Joann,

Its been awhile since I tested the summer months but from what I can recall it really doesn't make a significant difference in the long run. Of course during July when the market is dead it is very easy to get depressed about summer trading!

The good news is that market liquidity eventually comes back (many people also tend not to trade around December for this same reason) - I personally think that it is better just to trade and not worry about what day or month of the year it is. Some months will be great (about 1 out of every 4) and some will be marginal (about 1 out of 4) and most of the time things will be o.k. but not excellent (about 2 out of the 4 months).