Two weeks ago I started testing a 60 second ADX EMA strategy. As the name implies, this strategy uses two indicators: ADX (Average Directional Movement Index) and Moving Average. As I reported last week, unfortunately instead of profits, most of the signals caused losses. These were so big that I found it useless to waste another week continuing this “experiment” (detailed statistics are available under this link). So I broke the test and tested another strategy called ADX EMA II from Monday. I thought that not indicators but their interpretation was wrong. One of the readers shared with me my views on this strategy and I found it worth checking out.

Details of the new strategy were described in a separate article last weekend. But I did not expect the effectiveness to be worse than the original version of this strategy.

During the past week (excluding Wednesday), between the hours of 8:00 and 12:00, on the observed currency pairs, the ADX EMA II generated a total of 513 signals. Only 225 of them proved to be profitable and as many as 288 losers. This means that the efficiency was 43.86%. Taking into account the return on investment that UTrader trades between 70% and 73% in total, we could lose as many as 127.04: 1 in 513 transactions. This means that by taking only 1% risk, we would not be able to trade longer than 4 sessions. The original version of the strategy, the ADX EMA generated signals that we could lose 79.39: 1. It turns out that both the original and the modified versions are not suitable for trading on forex market.

On this case, I would like to show you, dear reader, that it is better to spend some time testing a strategy on demo before we start trading on real account. As promised, in a separate article I also present strategy that I intend to test for the next two weeks.

What is worth mentioning is that not all strategy options are as bad as the ADX EMA and ADX EMA II. Both the EMA Rainbow Strategy and the EMA 8/20, which I have tested previously, have proven to be profitable .

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