A New Asirikuy Counter-Trending Strategy: Trading Fibs With Amachay

During the past few months I have been developing Asirikuy trading systems alongside different members with the hope of finding systems that can act as strong compliments to our current Asirikuy portfolios. We have focused mainly on the development of counter-trending strategies as currently Asirikuy has a very good supply of trending strategies based on breakouts and momentum. After a significant amount of effort in the development of these new solutions the first one which has come to light (already fully implemented within the F3.66 framework) is Amachay. This new trading system follows a very interesting trading technique based on Fibonacci retracements which allows is to retrieve profit from the markets while trading against the prevailing trend.

The idea for Amachay came to me from an Asirikuy member named Wilson who wished to improve the code for his system. The code he had had been made by someone “for hire” and the source wasn’t available for modification so we had to start from scratch with the logic he had first proposed, adding ATR adaptive mechanisms in the search to increase the ability of the system to adapt against market volatility. After spending a few weeks coding and improving the strategy we came up with the first reliable reproduction of the logic on the “new EA template” within Asirikuy and we then moved onto the migration of this logic onto the F3.66 framework.


Amachay isn’t a very simple expert and as a matter of fact it is above average Asirikuy system complexity in regards to the way in which it manages trades. The system works through the use of Fibonacci levels built upon a certain past number of periods on the 4H charts and then waits for price to be within two specific levels to trigger trades against the trend. These “chosen levels” remain valid for a fixed set of time after which they are recalculated over the past X periods again. When price moves into this range – and fits another small set of conditions – two trades are triggered, when a first Fib target is reached the first trade is closed and the second one is moved to break-even, waiting for a second target to be reached at the next Fibonacci level. This tactic seems to work to a good extent for this strategy – move-to-breakeven strategies rarely do in my experience – generating good results on several different pairs.

Although I still have to go a long way into the development of our Amachay portfolio before releasing it to the community (probably within a few weeks) up to now I have seen a very interesting behavior which matches what we would expect for such a system. Profitable parameters are easily found for pairs like the AUD/USD and the GBP/USD but are terribly difficult to find for pairs like the EUR/USD and the USD/CHF. It seems that the EA truly captures mean-reversion in the sense that it fails to profit significantly on pairs that are regarded as “strongly trending” but gives good results on pairs which do show a tendency to go through these pullbacks. Amachay also suffers from a reduced number of trades on some instruments due to the difficulty in fulfilling the entry logic – although within acceptable significance limits – but most results show that the entries are quite high-probability opportunities which do tend to materialize into winners.

As I have said before there are still lots of tests to be done over Amachay in order to improve its logic and release it to the community but overall the system is already showing to be a very interesting addition to Asirikuy which will greatly compliment some of our trend-following strategies. This system is also our first use of Fibonacci levels (or any similar level-based strategy) which introduces us to a different world of trading systems to explore. For those of you who are curious about the name Amachay – which means “protector” in Quechua – comes from the fact that the system was contributed by Wilson -> Son of William -> Whil + helm -> helm -> protector, so the name is related to the original member who shared the idea with me.

Currently there is another system on the works Рwhose logic was also contributed by a member Рwhich will hold a name with a similar context. Right now I will continue to work on Amachay and this other system and hopefully will be able to release them along with their initial live account full portfolios within the next few weeks. Of course if you would like to learn more about my work in automated trading 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)

Print Friendly
You can leave a response, or trackback from your own site.

2 Responses to “A New Asirikuy Counter-Trending Strategy: Trading Fibs With Amachay”

  1. Franco says:

    Excellent job Daniel and Wilson keep it up! :)

  2. Wilson says:

    Thank you Daniel for the post. I think it’s perfectly fine to use Amachay as a counter trend system to complement Asirikuy other Breakout / Momentum strategies.

    However, I do use Amachay to trade breakouts as well. For example, once the price rallys to -2% ~ -8% fibo range, long trade could be initiated.

    As for personal preference, breakout trade is always triggered on one position only with tight stop loss and moderate profit target. It will counter the reduced number of trades situation by running counter trend alone, smoothen equity curve and shorten the drawdown period. That’s the reason why we decide to keep the fibo parameters open as it fits different currency pairs’ characteristics / DNAs.

    I also agree that it’s terribly difficult to find profitbale parameters for pairs like EUR/USD and USDCHF on 4H timeframe. Even you can find it, it will be very painful to run, that I can assure you. :) I will suggest you may look into 1H timeframe instead, probably due to currency pairs’ DNAs.

    Based on 1H timeframe & trading breakout as well as counter trend, you will have more trades as well. Then it’s time to look for a technical indicator filter like RSI divergence. Not sure if we can incorporate this now or in Phase 2.

    Finally, to cook it into a portfolio, you may like to consider trading different currency pairs on different timeframe like:

    Amachay Profolio No.1:
    AUD/USD Breakout + Counter Trend on 1Hr
    USD/CAD Breakout + Counter Trend on 1Hr
    EUR/JPY Breakout + Counter Trend on 4Hr

    Last but not least, it’s definetely worth looking into EUR/GBP & GBP/JPY by applying Amachay as it captures the breakout and counter trend nicely besides the best candidate GBP/USD so far.

    I won’t be surprised if Daniel could come out the first GBP portfolio by using Amachay within Asirikuy Family.

    Let’s look forward to that.

    Cheers

    Wilson

Leave a Reply

Subscribe to RSS Feed Follow me on Twitter!
Show Buttons
Hide Buttons