Trading Strategy Testing
Learn a simple trading strategy for small accounts to avoid sideways markets and focus on strong trends using the Hakenashi chart, 200 EMA, and Parabolic SAR. Backtest showed a 51% win rate and a profit of $66.62 from 100 trades.
Trading Strategy for Small Accounts: Avoiding Sideways Markets and Riding Strong Uptrends
Introduction:
Trading requires continuous learning and exploration of new strategies that can help traders achieve their financial goals. In this channel, we aim to provide our viewers with the best trading strategies that can be applied to different financial markets. In this video, we will share a simple trading strategy for small accounts that can help traders avoid sideways markets and focus on strong uptrends using Hakanashi charts, the 200 exponential moving average (EMA), and parabolic SAR indicator.
Hakanashi Charts:
Hakanashi charts originated from Japan and are similar to candlestick charts. The difference is that the Hakanashi chart highlights the average price movements to create a smoother appearance. On high time frames, the Hakanashi chart can be used to identify trends and reduce market noise.
The 200 Exponential Moving Average:
The 200 EMA acts as a strong support and resistance level. When the price is above the 200 EMA, it usually indicates an uptrend, and when the price is below the 200 EMA, it indicates a downtrend. We have used the 200 EMA in different videos in the past, and it has proven to be an effective indicator.
Parabolic SAR:
The Parabolic SAR is a technical indicator used to help traders determine the direction of an asset’s price movement and its changing direction. It can be used to identify the direction of a trend and to set the stop-loss level. When the Parabolic SAR points cross above the 200 EMA, we will wait for three consecutive bullish candles before entering a long position. Conversely, when the Parabolic SAR crosses below the 200 EMA, we will wait for three consecutive bearish candles before entering a short position.
Backtesting the Strategy:
We will test this strategy in the forex market, particularly the EUR/USD pair, using a 15-minute timeframe. We use a 100 initial balance with a 2 micro lot fixed trading volume. It is essential to record all trades and calculate the win rate of a strategy to review the losing trades afterward. During our backtesting, we recorded a win rate of 51%, and the highest number of consecutive losing trades was three.
Important Factors:
There are some small factors that traders must consider when using a trading system such as fundamental and market sentiment analysis. These factors help traders make sure that they are making the best trading decisions for their account. It is important to never trade a system blindly.
Conclusion:
Using this simple trading strategy can help traders avoid sideways markets and focus on strong uptrends to maximize their profits. Applying this strategy requires some discretion, and traders must consider other important factors before making a trade. Backtesting is essential to ensure that the strategy is effective, and traders must always record their trades to review losing trades afterward. We hope this video has been helpful, and we encourage you to share your thoughts and suggestions in the comments section.
