I have been exploring Forex trading for nearly a year now and have at last devised a egy that appears to always create a profit during back-testing in order that only one of the previous 8 years would have seen a loss. It's a simple trending egy according to a combination of technical indiors, and as such suffers from the well-recognised problems of needing trends to create any decent yield as otherwise the overall market pros and cons generate a gradual loss. I don't regard this as the final egy, but only a stop along the way which may give some further insights.

The question I have is whether the current results are great enough to start trading in the hope of providing a while I learn somewhat more (always good to get paid to learn and assists with the motivation).

For 1 hourly time-frame EURUSD over the previous 8 years the egy averages ~100 trades / year generating ~7 pips profit / commerce (~700 / year = ~5600 total) with a maximum draw-down of ~700 pips and a ~40% hit rate. The hit rate is reduced by often reported standards but even so t he profitable trades create more than the losses on average so that general there's a profit. I have attempted to cut down the losses, however each time it reduces the winning trades with a factor over the profit/loss ratio so the total impact is negative. Basically it appears you have to take risk to be in early with this approach differently waiting until you are more certain increases the hit rate, but reduces the remaining profit.

One further effect of a low hit rate is I do not think bet compounding would be helpful as I have noticed that at these low levels you tend to over-stake after a successful deal only to then loose a larger amount on the next deal that's more inclined to be a loss. Compounding appears to work complete when you have runs of losses or successes and may benefit from adjusting the bet back or upwards after every position . I did simulate compounding, but the results were consistently worse at the close of the period in question unless it encompassed a region of successive losses or profits.

The egy is currently in demo and if it continues to be successful I intend to start on 1/pip, possibly working up towards #10/pip at which point I should buy ~#4000/year on average assuming a 3 pip dealing loss / commerce supplied the market stays within the parameters of the previous 8 years that appear to have covered some tumultuous times. My fundamental perspective is that trends will continue to arise in the short to near term because the tectonic plates of economic alterations continue to move on account of the on-going charge problems. My 3 pip figure is a figure based on the fact that this isn't a egy specifically seeking to exchange at volatile occasions, but instead it trades just after the hour whenever I get the signal (hopefully SMS triggered when I look into it). In my short early experience of live trading on Capital Spreads in which they quote 1 pip spread on EURUSD this seemed sensible at #1 / pip at least.

The only items I haven't modeled correctly in back-testing are the daily roll-over charges (or possibly even charge if interest rates are large enough) and also the stop loss. Currently, the former appears to be around 1/2 pips for every working day, which ought to use to many but not all of trades. The stop loss I can only do at the time-frame level and from that 75 pips appears a good value for greatest pips. It may be possible to extent the back-test to do both of these properly, I will have to investigate further. At the often-quoted 1% of total at risk this stop loss would mean I would have to fund #7500 for each 1/pip that I wanted to exchange.

As a comparative newbie I'd welcome any thoughts / observations on my plans, thanks.