This is an advanced version of the original ‘Sugui-Reversal’. It has extra risk management settings such as a stop loss, a take profit and a maximum time limit on any trade. The strategy is optimized for trading GBPJPY, which is a fairly volatile currency pair.
In fact, not many human traders like trading the GBPJPY due to its market unpredictability. But if traded by robots, trading the pair can be very profitable. Sugui-Reversal was developed; to help traders who love trading the GBPJPY.
The Sugui-Reversal strategy is the most complex trading strategy in our portfolio. To tacle the very volatile nature of the GBPJPY pair, It uses no less than 4 technical indicators; which should reduce the likelihood of reacting on fake signals. The 4 indicators are Moving Average Convergence Divergence (MACD), Moving Average, Williams Percent Range and Bollinger Bands.
The Moving Average indicator is one of the most commonly used trend indicators, which is based on computing the averages of past data depending on the set time span on the period. Sugui-Reversal only uses a Moving average indicator of period 10 and a timeframe setting of H4.
The MACD indicator is a technical indicator which also analyzes the market for convergence and divergence conditions. In a divergence condition, the market is normally in a strong bullish or bearish trend, while in convergence condition, the market is normally in consolidation.
By default, a MACD indicator has three components which include: MACD, MACD Signal line, and a MACD Histogram. The MACD is the difference between EMA period 12 and EMA period 26. The MACD Signal line is an EMA period 9. The MACD Histogram is the difference between the MACD and the MACD histogram. This feature can be altered in case you want to customize it for a trading strategy, as is the case with Sugui-Reversal. The Sugui-Reversal strategy used a combination of 4 MACD indicators all using different Moving averages with different periods and on different timeframes.
The William Percent Range indicator identifies whether the market is overbought or oversold.
The Bollinger Bands indicate the market trend, consolidation and when the market trend is strong.
The Sugui-Reversal strategy is most successful when the market is in a strong bullish or bearish trend. When the market is in consolidation, the strategy is not expected to be profitable.
Using the four indicators mentioned above, the Sugui Reversal system analyses the markets to identify possible entry and exit points for trades.
There are four conditions that should be met for the strategy to confirm that conditions for a buy trade have been met.
If any of the above conditions are met, then all open buy order/trades are closed with immediate effect.
Similar to buy orders, there are four conditions that should be met for the strategy to confirm that conditions for a sell trade have been met.
After opening a short position, the strategy goes ahead and tracks the trade until an optimal closing signal is generated. According to the
strategy’s algorithm, there are three conditions that could cause the strategy to close short positions.
The Sugui Reversal strategy also goes ahead to incorporate a number of risk management strategies so as to caution the trader in case of any eventualities. This is extremely important since the trader cannot lose all his invested funds from a single trade at once.To start with, the strategy is designed in such a way that it can only have one open trade at a time. This ensures that the free margin is always maintained as high. Also, the maximum exposure is set at 15% margin of the Equity.
The strategy also ensures that your trades have a stop loss and a take profit in case the markets become too volatile like during news releases. The take profit is by default set at 120 pips while the Stop loss is by default set at 67 pips. However, you could alter these settings if you so desire.Also, any open long position can only run for a maximum of 1450 minutes while a short position can only run for a maximum of 1360 minutes.
Profitable tick-based backtest
The tick-based backtesting results of the Sugui Reversal shows that after about 666 trades, the strategy would make 40% profit.