New Life For Watukushay No.1 Thanks to New Trading Techniques For Moving Averages

I have to say that Watukushay No.1 has always had an important place in my heart, much more important than its place in my trading arsenal. This trading system was the first implementation within the Watukushay project seeking to create systems in a very detailed way which people could follow and imitate. This expert started the idea of sharing code within a community and teaching traders how to build systems on their own based on sound trading tactics from start to finish. Being the first system on my coding project, it didn’t have performance as good as that of subsequent systems (such as Watukushay No.2) reason why it doesn’t hold a place on most Asirikuy member portfolios. However,  just recently – thanks to the contributions of an Asirikuy member – this EA has seen a total revival of its logic as new moving average trading tactics with much better performance are now being implemented within its coding.

For those of you who aren’t familiarized with this system, Watukushay No.1 is what many would consider a universal moving average cross system. Its objective is to profit from the behavior of two moving averages and how they interact with one another. The system is unlike most moving average experts available online because it implements an adaptive mechanism which makes sure that its lot size, Stop Loss and Take Profit values align with market volatility conditions. The EA also implements a secondary closing mechanism based on a “faster” moving average which increases profitability in certain cases.

The problem with Watukushay No.1’s “traditional logic” is that it falls below the standards of historical profitability which we have developed in Asirikuy. With an average compounded yearly profit to maximum draw down ratio below 0.5 and only working on the GBP/USD the system seemed to be only useful as an educational curiosity as most people would find its profit targets and level of robustness simply unacceptable. This is why it was important for me to overhaul this system to make it much better and up-to-par with other Asirikuy systems but – up until now – most of my efforts had been frustrated due to my inability to find modifications to its moving average cross logic that yielded much better results.

Since my studies of moving averages have been centered mainly on crosses of very long term moving averages – especially on time frames like the daily – all my efforts seemed to focus on the finding of profitable strategies which were much more like Comitl or Quimichi than – for example – Teyacanani. My idea was to make Watukushay No.1 a system that would trade many currency pairs with the same parameters with the goal of achieving long term profitable results with very high levels of robustness. However an Asirikuy member – who just recently joined – worked on the implementation of a very interesting moving average logic which allowed me to add some features to Watukushay No.1 to generate a powerful portfolio of strategies that could rival the profitability of an Atipaq or Teyacanani portfolio.

The new technique implemented in Watukushay No.1 – which will be released during the next few weeks to Asirikuy members – is based on much shorter period moving averages on the one hour time frame using some creative time filtering mechanisms which generate a huge improvement in the profitability of the strategy. Analyzing ten year results on several pairs demonstrates that crosses tend to be more meaningful when they happen under hours which follow certain volume patterns, greatly increasing the probability to achieve profits on trades which have been entered. Certainly there might be significant element of dependency due to the straight way in which hours are filtered and used but the extent to which this happens is difficult to evaluate until we have some live tests to do back/live testing consistency analysis.

Right now I am very happy to see the results of this new implementation of Watukushay No.1 . The coding of this new  “old friend” is almost ready with proper NTP DLL time adjustments (so that there is no problem in knowing which hours needs to be filtered regardless of the broker) and several added error handling features to deal with the new information handled by the EA. Certainly this is a very important achievement for me as it will bring a lot of added usability to this Asirikuy system and will bring the possibility to generate additional Atinalla portfolios once we determine the level of dependency attained by this EA and its new trading strategies. The new Watukushay No.1 trading techniques have profitable 11 year backtesting settings for 7 different pairs, showing the big potential of this new implementation. The above results can still change and improve as I develop this new implementation further but right now they are already very good :o) It is however important to remember that the question of broker dependency is still yet to be evaluated.

If you would like to learn more about algorithmic trading and how you too can learn to code systems from scratch based on sound trading tactics and adaptability please consider joining Asirikuy.com, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach towards automated trading in general . I hope you enjoyed this article ! :o)

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7 Responses to “New Life For Watukushay No.1 Thanks to New Trading Techniques For Moving Averages”

  1. McDuck says:

    this modification looks like a VWMA version for Forex market. Congratulations to FJ and you.

    • admin says:

      Hi McDuck,

      Thanks a lot for your comment :o) Hopefully this will be a great addition for the whole Asirikuy community !

      Best Regards,

      Daniel

  2. erick says:

    “crosses tend to be more meaningful when they happen under hours which follow certain volume patterns”

    That is a smart, creative idea.

    For backtesting, what are the GMT times of the Alpari data? Are they GMT + 1 with an automatic Daylight Savings Times adjustment (so you do not have to adjust for DST during a backtest)?

    • admin says:

      Hi Erick,

      Thank you for your post :o) The Alpari backtesting data has GMT +1 with the pertaining DST changes so in order to be coherent within backtests we have implemented an internal code which automatically adjusts according to the times when DST changes happen within the backtesting data. The filtered hours are defined in terms of UTC so when trading live – independently of the broker – we simply get a time stamp through NTP which allows for accurate hour determination. I hope this answers your questions :o)

      Best Regards,

      Daniel

  3. Maxim says:

    Daniel & FJ,

    Cheers on additional achievement!
    I’d like to know whether the renewed strategy uses MA length adaptation tactics, described in one of your Currency trader magazine.
    Additionally, I would propose to release the EA with indicators from TA-LIB,-this would allow live testing to be “smooth” since changing indicator implementation after starting the live test could introduce unwanted effects on the performance.

    Maxim

    • admin says:

      Hi Maxim,

      Thank you for your comment :o) Well, the EA still doesn’t use that adaptive tactic but it may be worth a shot to try it! Regarding TA-lib, this is exactly what we intend to do. Andrei has already coded a version which includes all used moving averages and this EA will become our first TA-lib enabled version. As you say it makes no sense to release a non TA-lib version if we intend to migrate later on. Thanks again for your comment Maxim!

      Best Regards,

      Daniel

  4. Franco says:

    Glad to see this is working after all, Daniel thanks for your effort :)

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