Today is a special day :o). After a few months of very strong development efforts I am finally close to finishing my last trading system, system No.4 on the Watukushay Series, called Teyacanani. I have to say that this trading system's simulation results have been the best I have had so far for a system on the Watukushay series. The expert advisor was coded with backtesting reliability in mind and shows 10 year profitable backtests (as all the other systems within the Watukushay Project). On today's post I want to talk to you a little bit about this expert advisor, its story and what I wanted to achieve with its development. I will show you some sample trades and backtesting graphs to help you see the large versatility and power of the extremely simple tactic used by this trading system.
The story of this trading system begins with the development of Watukushay No.2. This expert advisor which took a long time to develop was my first attempt at making a trading system based solely on candlestick patterns. Watukushay No.2 surprised me with its initial backtesting results and continued to surprise me and all Asirikuy members with its very impressive live testing results managing to profit greatly from the difficult market conditions we saw on this year's second month. However I still felt that I could do better and this is when Teyacanani came into play.
I decided that I wanted to develop a trading system which was more profitable and versatile than Watukushay No.2. I wanted to develop an expert advisor we could use to trade many more instruments besides the EUR/USD and GBP/USD which are the instruments traded by Watukushay No.2. With Teyacanani I wanted to achieve portfolio trading in a much more profitable fashion than what was achieved with Kutichiy which - although profitable for several instruments - failed to achieve very good profitability figures on instruments outside the EUR/USD (in simulations).
After doing tons of analysis on several currency pairs and testing several ideas I finally came up with an extremely simple idea which was based on candlestick patterns on the one hour charts and which was able to give profitable results on several currency pairs, reaching similar profit/risk targets on most instruments tested. Teyacanani is very good at following trends and it has an internal closing mechanism which avoids hitting the stop loss on almost every trade. Of course, not all trades are like the one shown below but this trade shows you the actual potential of Teyacanani at capturing long market movements.
Surprisingly, although the logic of Teyacanani is a ton simpler than the logic of Watukushay No.2, it is able to achieve higher profits and lower risk targets. This expert advisor has shown very profitable ten year backtests on the EUR/USD, GBP/USD and USD/CHF. You can see on the image below the equity curves achieved from ten year backtests (Jan-01-2000, Jan-01-2010, 100K initial balance) of the EUR/USD and GBP/USD (these backtests were run with minimal risk, higher yearly compound profits are achievable by increasing risk).
I strongly believe than Teycanani hits the nail in the head with its approach and I am hoping to find 10 year backtesting profitable results for at least 6-10 different currency pairs. This system will be released to all Asirikuy members in April and if everything goes well I will launch this system coupled with two live accounts to start testing the strategy on two different currency pairs simultaneously. I am very excited about Teyacanani since it is the first trading system I have coded which has gone beyond what Watukushay No.2 was able to do :o) This trading system will be a very important part of our trading arsenal and if back/live testing consistent it may become Asirikuy's most profitable trading system !
And for those of you who are curious... Teyacanani is a word in Nahuatl, the ancient language of the Aztecs in Mexico which means "leader". :o)
If you would like to learn more about the Watukushay Project or the systems I have coded and tested and how you too can learn how to approach automated trading in a sound way aimed at long term profitability please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !