We buy here when the histogram is green and sell when it turns red.
Simple, right.
That's a profit of over 550 pips.
Well, let's test this simple trading strategy 100 times to find out if it's
profitable or not.
What if we trade forex without a stop loss?
In today's video, we'll test a free and simple trading strategy 100 times without a
stop loss.
This strategy is suggested by one of our subscribers.
His name is Artem.
I hope I'm pronouncing his name properly.
Well, I'm not sure if we'll be able to complete the experiments or not.
I mean, trading forex without a stop loss is pretty dangerous, right?
Let's forget about all the theories and give it a try.
You know, numbers never lie.
Let's begin after the intro.
Remember last year, we tested a similar trading strategy using two trading accounts?
Everything was the same, including the forex pair entry and take profit, etc.
The only difference was the stop loss.
Anyway, I'll leave a link to this video at the end.
Make sure to watch it as it compares trading with and without stop loss.
So we'll go over the trading strategy today.
Share with you some examples from the chart.
Test is simple trading strategy 100 times.
And finally, look at the results and some important tips that will help you become
profitable in the forex market.
So if you're wondering whether it's worth using a stop loss or not, then this video
might answer your question.
The strategy is super simple.
We just need to add a free indicator to the chart.
It's called Squeeze Momentum Indicator.
It's available on Trading View, which is also a free trading tool.
This indicator is developed by Lazy Bear and is supposed to help us identify zones of
consolidations where the market prepares for explosive moves.
It's a bit similar to the classic MA seed trading strategy that we back test 100 times
before. The concept is pretty much the same.
This indicator is a derivative of Jon Carter's team.
Squeeze a volatility and momentum indicator introduced by John Carter of trade.
The markets, which capitalizes on the tendency for prices to break out strongly
after consolidating in a tight trading range.
Let's not complicate things.
The strategy is simple.
It's essentially based on the histogram of the squeeze momentum indicator.
In one sentence, we go long when the histogram turns green and short, as soon as
the color changes to red.
Simple, right.
In general, there are other rules to consider when we use this indicator.
But as usual, I'll stick to the setup suggested by our subscriber, Artem.
His strategy does not have any extra rules about the squeeze phases that the indicator
identifies when it prints these black crosses on the midline.
According to the developer of this indicator, these are the areas where we're
not supposed to trade.
When the black crosses start showing up, that means that the market is consolidating and a
massive breakout is expected to occur soon.
I'll ignore them as per the request of Artem, but we'll see at the end of this video
if these Black Cross signs are useful or not.
All right. Before we begin backtesting this strategy.
Let's look at two quick examples from the chart.
This is the euro USD one hour chart.
We can see here that the histogram indicates that we are on a strong downtrend.
All the bars are in red color.
We should avoid going long here and simply wait for the color of the histogram to change
to green. All right.
This is the first green bar.
We go immediately long and we remain in until the color of the histogram changes to
red. No.
Take profit is needed here.
We just close our trade the moment the red histogram begins to form.
Great. This was a successful trade.
Well, we could have made more profit if we exited the trade here.
But let's stick to our strategy.
That was the buy setup.
Let's look at a sale example.
We can notice that this strategy places trades the whole time we enter a sale trade,
the moment a buy order is closed and vice versa.
I'm a bit curious to see how it turns out.
This simple trading strategy is supposed to run on the one hour time frame, as per the
recommendation of Artem, who is the person who submitted this strategy for backtesting.
You can always submit yours at WW.
Test mlive.com.
Slash submit.
Anyway, let's go over a sale example.
Again, we should go short the moment the red histogram starts to form.
That means that the market is overbought and it's time to anticipate a bearish move.
We can see the first red histogram bar.
We go immediately short when the candle closes.
No need to set any stop loss.
We just remain in until we see the first green histogram bar.
This is the one hour chart, so this could take some time.
All right. A green histogram bar has just formed.
It's time to exit the market.
That was another successful trade.
It wasn't as profitable as compared to the previous example.
Let's not give any pre judgments for now and begin back testing the strategy 100 times.
As usual, I'll use our forex trading journal.
You can use it for absolutely free.
I'll leave a link to download it in the video description.
You can also use the online version, but bear in mind that the data will be lost if
the page is refreshed.
We'll use a $1,000 balance and stick to one micro lot to minimize the risks.
I'll fast forward the video to save time.
Don't forget to hit the thumbs up button to encourage us to make more videos in the
future. It takes a few seconds to do, but it helps us a lot with the YouTube algorithm.
You can also subscribe if you enjoy this type of content.
All right. We have just completed backtesting, this strategy 100 times.
The process didn't take too much time as the strategy is pretty straightforward.
If I exclude my coffee break, the total time needed was 52 minutes.
Let's look at the results now.
We started our backtesting on the 3rd of January 2022 as the market was closed on the
two previous days.
It took us five months and 22 days to complete the process and these are the
results. We started our backtesting with 1000 and we ended up with the total balance
of $1,161.93.
That's a 16.1% growth over six months.
The success rate is 50%.
We had eight consecutive losing trades, and yet the drawdown remained below 2%, which is
an excellent sign.
We could have used a higher volume size, but I'm still afraid of the drawdown.
Eight consecutive losing trades is pretty significant, but a great opportunity to
identify the setups where this strategy is not profitable.
These are the eight consecutive losing trades.
Please ignore the take profit level as it's not relevant here.
The first thing that captured my attention is these black crosses.
Remember that the black crosses along the zero line indicate that there is a market
squeeze and we shouldn't enter any trade until they stop showing up.
We could have avoided some of the losing trades here if we respected the rule, but at
the same time prevented us from riding this amazing super trend.
So should we use them or not?
What do you think?
Let us know in the comment section.
I think this strategy is all right as long as we use the right volume, size and total
balance. For instance, if we had a $100 count, this trade alone would have made us
lose 10% of our investment and almost 18% of our initial balance if we consider these
eight consecutive losing trades.
The same thing would happen if we increase our default volume size.
The developer of the strategy uses the moving average crossover to enter the market.
The Squeeze Momentum Indicator acts like a filter here.
I find this approach more reliable.
I've done a quick analysis using the trade simulator here.
I can see some good metrics.
Let us know in the comment section if you have any ideas on how to further optimize
this setup. And don't forget to subscribe to our channel and press the bell icon to get
new video updates.
Happy Trading.