My Best GBP/USD FX Engine - 3873 Pips, Anyone?

It's been a while since I've posted a recipe for a forex system that you can take out and start trading with today. So in the interests of making this blog useful, and perhaps improving the trading profits of you folks kind enough to read it, here's the formula for an FX Engine I created that raked in 3873 pips trading the GBP/USD pair in three years of backtesting. This made it my best-performing engine for trading the British Pound, and I think the key factor was that I used my market-timing studies to determine when it would enter its trades.

Without further ado, here's how to put it all together:

First off, you'll need to create your own custom signal. Actually, I'm getting ahead of myself...if you've never used FX Engines before you'll need to register. So, now you're registered and in the Signals section. Next, choose "Breakouts" and "Create a New Signal". Here are the parameters to enter:

Name: call it whatever you want.
Signal Interval: 60 MINUTE
Signal Type: Entry Signal
Signal Activates: Price breakout above the high plus 2 pips for the last 1 period

Now save it and you're done with the signal.

Next go to the Engines page and choose "Create a New Engine." Here's what to enter there:

Name: Whatever. Hey, how about "ForexForays.com Engine"? :-)
Currency pair: GBP/USD
Trade Direction: Long
Entry Signal to Select: Choose the one you just created from the menu.
Entry Settings: Market Entry
Entry Schedule: Choose "Activate my entry signals only during the times outlined below". For Sunday, select "No trades". For every other day, choose 8:00 AM as the start time and 9:00 AM as the end time - so just an hour window of time each day.

On the next page, you'll choose an exit strategy for this engine. Choose Fixed Stop & Limit Exit (the first one) with 100 pips as the stop and 200 pips as the limit exit.

And that's it - just scroll past all the other options and hit the Finish button at the bottom. Now you're ready to backtest the engine and find out if I'm full of it or not. You can do that by going to the Tests link, choosing your new engine from the menu and running a test. When selecting the Pip Spread, remember this is a GBP/USD engine so choose 5 pips. Now hit the Begin Test button and see what happens!

If you do end up trading with this engine, just keep in mind that while it certainly performed well in backtesting, there's no guarantee it'll continue to trade profitably in the future. Trade at your own risk!

PS - I have a EUR/USD engine that performed even better than this one. Maybe I'll feature it in a future post.

Related links:
FX Engines Home Page
FX Engines Registration