hi and welcome back to trading strategy testing channel where we backtest your
trading strategies and share with you tips on how to become a successful trader
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we received many requests from our subscribers asking us to make a video back-testing the
hikinashi trading strategy with the help of an expert advisor the best way to baptist a
trading strategy is by using expert advisors this method allows us to save time and get
accurate results at the end and that's what we will be doing in today's video as usual we will
start off by describing the hikinashi trading strategy with some examples from the chart
after the back testing process we will reveal the results together with our feedback stick till the
end as we will share with you how to download the free expert advisor in case you want to use it
you can also submit your strategy at 3wtstlife.com
submit if you want us to backtest if for you without any further ado let's get started
well let's learn about the strategy we first need to apply the hikanashi candles on our chart
if you are using a trading view platform you can simply select the hikanashi candlesticks
otherwise if you are using metatrader you can use one of the hikinashi indicators
that you can download for free from metatrader online market
this strategy was sent to us by angle fx who is one of our subscribers well it seems simple
and easy to use we go long when we see a bullish hikanashi candle after a series of bearish ones
we exit with a profit or loss as soon as we see a bearish candle on the other hand we
go short as soon as a bearish candle comes up after a series of bullish hiking ashy candles
we exit the trade when the color changes again the strategy seems simple and straightforward and
should be used in the four hours or daily time frame according to the strategy submitter we
will try it on different time frames to see which one is more profitable at the end of this video
well when we started back testing the strategy we realized that it's not profitable due to all the
false signals we encountered we decided to add a little twist the entry conditions remain the same
but we only exit the trade when we have a pullback of three successive candles
let's look for a long trade on the chart we should enter the market when the hike and ashy
candle changes from bearish to bullish and exit the trade when the bearish candle shows up again
we might need to seek confirmation to avoid false signals by monitoring the following two
candles it's practical as we are on the daily time frame we just need to check the chart
once a day but what would happen if we switch to smaller ones let's continue watching to find out
let's look at another example from the chart the haikanashi shows us the direction of a
trend through its color-coded candles remember that the haikanashi price bars are averaged they
don't show the exact open and close prices for a particular time period that's why the best way
to practice this strategy is by using an expert advisor in a bar simulation mode you can notice
that the price reversed with a series of bullish hiking ashy candles it's time to exit the trade
all right let's begin back testing we will choose to run it on the euro usd pair
and select the daily time frame as per the request of our subscriber
we will also try to test the same strategy on smaller time frames as we keep on receiving
requests from our subscribers asking us to practice the same strategy on a different
time frame to see which one is profitable we will proceed with the daily time frame first
then compare the results with the smaller ones at the end of the video we will provide this expert
advisor for free in case you want to test it but make sure to watch this video till the end to find
out whether the hike and ashy trading strategy mentioned in this video is profitable or not
we are using a one thousand dollar account and entering the market with a fixed one micro lot
volume to make sure that we remain in the market long enough to find out whether the strategy is
profitable or not if you are new to forex trading and you want to build your own expert advisor
or just learn how to trade forex you can check out the udemy course we recommend all the links
are in the video description finding the best lot size with a tool like a risk management calculator
can help you determine the best lot size based on your current trading account assets whether you're
making a practice trade or trading using your real account when you place an extremely large trade
size relative to your account balance the bridge gets extremely narrow and any small movement in
the market would be like a gust of wind and could send a traitor the point of no return
all right we have just finished back testing this strategy on the daily time frame
these are the results well apparently we only had 11 trades over one year time
the drawdown is 5.9 which is good but we lost 3.2 percent of our account i am not really impressed
but i think that we still can optimize the strategy to get to a profitable set of rules
this trading strategy is not that profitable in the daily time frame let's try the smaller ones
all we need to do is change the time frame and press on start again we will disable the visual
mode in order to speed up the process we received a question recently regarding the modeling quality
some of our subscribers noticed that metatrader does not run a reliable back testing process and
usually ends up with a 50 percent or even lower accuracy rate the best way to solve this issue is
by downloading the database of the forex pair and time frame you are using let's learn how to do it
you can click on tools and select the history center otherwise hit on f2 key you will then
have all the currency pairs supported by your broker you can choose the one you are using
to backtest your strategy and download the data associated with each time frame
this trick will allow you to speed up the process and get accurate results
let us know in the comments section if you have any questions about the process
let's continue back testing the strategy this time we are selecting the one hour and 15 minutes time
frames which one will be more profitable in your opinion well let us know in the comments section
and don't forget to subscribe to the channel if this is your first time here many traders new to
forex will often wonder if there is a time frame that is better to trade than another
fundamentally choosing the best time frame to trade forex will depend greatly on the preferred
trading style and strategies used to choose the best time frame consider what your trading style
is and what trading strategy you wish to follow these should influence the appropriate time
frame to be trading on then select a technical analysis chart that you are comfortable with
conduct a thorough analysis and ensure to implement sound risk management on all trades
let's look at the final results now well we can see that the strategy failed to make any profit on
the three time frames the smaller the time frame is the higher is the loss and the more consecutive
losing trades we encountered this is the kind of strategy that requires an additional indicator
to filter out all the losing trades i would advise the subscribers who submitted this
hikanashi trading strategy to think twice before using it to trade forex it still requires a lot
of optimization the easiest way to do that is by analyzing the time frame with the lowest number
of trades adding different indicators to reduce the number of the losing ones
then we can look at the event calendar to find the reason why we hit the stop
loss and work around it like what we did in the zigzag strategy optimization video
feel free to check out the other trading strategies we tested on this channel and you
can download the expert advisor we tested today from our website the link is in the description
box remember to use your demo account before investing your hard earned money happy trading
you