Forex Weekly Bias: Bearish Mean Reversion

By Lawrence

A simple forex trading signal that exploits the mean reversion behaviour of Euro and its Monday weaknesses.

Do not underestimate a simple system like this. It is a very profitable system by itself and a strong mechanical filter for forex day traders.

Performance

Following chart shows the performance of the trading setup in pips. As usual, 1 pip taken per trade (2 pip round turn) to account for slippage.

image

The model only trades on Monday. You know whether you are going to take the trade by Friday close.

Easy enough?

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Comments
  • MidKnight March 23, 2014 at 8:22 pm

    Thanks for this idea, really simple but effective! While what you show is very effective it lacks qualities of a complete system – do you personally look to take simple effective ideas and turn them into systems or do you use these ideas as context to wrap around discretionary trades? My memory may be fading, but I seem to recall on the neoticker forum that your trading was “grey box”…..

    With all my best,
    MK

    • Lawrence Chan March 24, 2014 at 10:07 pm

      This and quite a # of “ground rules” drive my black boxes.
      e.g. This rule drives a model to look for short on Monday. The filtering with intraday data boost the performance from 60% to 70% and better risk/reward control.

      My grey boxes on forex are designed to take on major swings similar to my long term breadth trading models. They have to be grey box because I choose a different size to commit depending on my performance with my regular trading. Think of these idea trades with clean cut historical performance as backing. =)

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