Global G7 Combo Forex Trading Strategy was developed by Dr. Glen Brown for his Global Multi-Asset Class Professional Proprietary Trading Firm.
The strategy trade the 7 major forex pairs namely:
**The euro and US dollar: EUR/USD.
**The US dollar and Japanese yen: USD/JPY.
**The British pound sterling and US dollar: GBP/USD.
**The US dollar and Swiss franc: USD/CHF.
**The Australian dollar and US dollar: AUD/USD.
**The US dollar and Canadian dollar: USD/CAD.
**The New Zealand dollar and US dollar: NZD/USD.
- EUR/USD: This is the currency pair that represents the Eurozone’s euro currency and the United States dollar. It is one of the most heavily traded currency pairs in the world, and it is considered a major currency pair in the forex market. The EUR/USD exchange rate is influenced by a variety of economic and political factors, including interest rates, inflation, employment data, and global trade flows.
- GBP/USD: This is the currency pair that represents the British pound sterling and the United States dollar. It is also a major currency pair in the forex market and is heavily influenced by economic data and geopolitical events, including Brexit negotiations, interest rate decisions, and global trade tensions.
- USD/JPY: This is the currency pair that represents the United States dollar and the Japanese yen. It is also a major currency pair and is influenced by a variety of factors, including interest rates, economic growth, and global market sentiment. The USD/JPY exchange rate is often used as a barometer of risk sentiment in the financial markets.
- USD/CHF: This is the currency pair that represents the United States dollar and the Swiss franc. It is often referred to as the “Swissie” in the forex market and is known for its strong correlation to gold prices. The USD/CHF exchange rate is also influenced by interest rates, inflation, and global economic trends.
- USD/CAD: This is the currency pair that represents the United States dollar and the Canadian dollar. It is influenced by a variety of factors, including oil prices, interest rates, and economic growth. The USD/CAD exchange rate is also heavily impacted by the relationship between the United States and Canada, as well as their trade policies.
- AUD/USD: This is the currency pair that represents the Australian dollar and the United States dollar. It is influenced by a variety of factors, including commodity prices, interest rates, and economic data. The AUD/USD exchange rate is often used as a barometer of global economic growth and commodity demand.
- NZD/USD: This is the currency pair that represents the New Zealand dollar and the United States dollar. It is influenced by a variety of factors, including commodity prices, interest rates, and economic data. The NZD/USD exchange rate is often used as a barometer of global economic growth and commodity demand, particularly for dairy products, which are a major export for New Zealand.
We add each currency pair to the Global Algorithmic Trading Software(GATS)-System #1 to #6 risking 0.01% per trade with a Global Traders Stop Loss of one times the Daily Average True Range (DATR) and a normal trailing stop of 350 points.
Global Algorithmic Trading Software(GATS)-System #1 to #6 uses computer codes and chart analysis to enter and exit trades according to set parameters such as price movements or volatility levels. Once the current market conditions match any predetermined criteria within the software, the trading algorithms will execute a buy or sell order on your behalf.
Global Algorithmic Trading Software(GATS) runs on MetaTrader 4, the most popular trading platform in the world. MetaTrader 4 is an advanced trading platform that gives you access to a range of tools and features to help you carry out analysis and customize your trading experience.
The value of the Daily Average True Range (DATR) indicates how much price is expected to move against a existing trend without a material trend change. We are fully aware that the Daily Average True Range (DATR) could generate whipsaws that lead to stop out. If this happens we could increase the Global Traders Stop Loss(GTSL) to two times the Daily Average True Range (DATR).
The main purpose of using the Daily Average True Range (DATR) is to create a Global Traders Stop Loss(GTSL) line that follows the trend and gives an exit signal as soon we see a possible change of trend.
1998 was a brutal year for Long-Term Capital Management L.P. (LTCM) and we learn from it!
Long-Term Capital Management (LTCM) was a hedge fund that was founded in 1994 by a group of financial experts, including Nobel Prize-winning economists. The fund’s trading strategy involved using mathematical models to identify pricing inefficiencies in the bond market and then taking leveraged positions to exploit those inefficiencies.
The strategy was highly complex and relied on sophisticated models and algorithms to identify market opportunities.
Despite its initial success, LTCM experienced significant losses in 1998 due to a number of factors, including a sudden and unexpected decline in bond prices, a sharp increase in market volatility, and the inability of the fund’s trading strategy to adapt to changing market conditions. The losses were so severe that they threatened to destabilize the global financial system, and the Federal Reserve was forced to orchestrate a bailout of the fund to prevent a wider financial crisis.
The collapse of LTCM is widely regarded as a cautionary tale of the risks associated with highly leveraged trading strategies and the dangers of relying too heavily on mathematical models and algorithms without accounting for the unpredictable and changing nature of financial markets.
The experience of LTCM underscores the importance of risk management and the need to be prepared to adapt to changing market conditions, even when using advanced trading strategies.
Advanced performance review for Global G7 Combo Forex Trading Strategy as at February 27, 2023
- The account balance is $20,100,728.84 and the equity is $20,119,015.89, indicating a small amount of open trades or floating losses.
- The highest account balance achieved was $20,100,728.84 on February 27th, and the profit to date is $100,728.84.
- The account has earned $4,419.47 in interest and has had $20,000,000.00 in deposits, indicating that the majority of the account’s growth has come from trading profits.
- The maximum drawdown experienced by the account is 0.20%, which is relatively low and suggests that the account has not taken on excessive risk.
- The daily gain for the account is 0.04%, and the monthly gain is 0.50%. The absolute gain is also 0.50%, which suggests that the account has been performing steadily over time.
- The profit factor is 2.13, indicating that the account’s profits are more than twice the amount of its losses.
- The standard deviation is $2,130.388, which measures the volatility of the account’s returns.
- The Z-Score is -9.98, which suggests that the account’s returns are statistically significant at a 99.99% confidence level.
- The expectancy is 11.4 Pips / $447.68, which represents the expected profit per trade.
- The AHPR (Average Holding Period Return) and GHPR (Geometric Holding Period Return) cannot be calculated based on the data provided.
- Let us examine the The profit factor of 2.13.
- The profit factor is a measure of the relationship between the profits and losses of a trading strategy. It is calculated by dividing the total profits by the total losses. A profit factor of 1.0 or greater indicates that the strategy is profitable, while a profit factor of less than 1.0 indicates that the strategy is losing money.
- In the case of the Global G7 Combo Forex Trading Strategy, the profit factor is 2.13, which is quite good. This means that for every dollar lost in a losing trade, the strategy has earned $2.13 in winning trades.
- To calculate the profit factor, we would divide the total profits by the total losses. Unfortunately, the data you provided does not include the total number of winning and losing trades, but we do know that the total profit is $100,728.84.
- Assuming that the profit was earned over the 236 trades that you mentioned, we could estimate the average profit per trade as follows:
- Average profit per trade = Total profit / Total trades Average profit per trade = $100,728.84 / 236 Average profit per trade = $426.78
- From here, we can estimate the total losses by dividing the total profits by the profit factor:
- Total losses = Total profits / Profit factor Total losses = $100,728.84 / 2.13 Total losses = $47,320.31
- Assuming that these calculations are accurate based on the available data, the Global G7 Combo Forex Trading Strategy has achieved a profit factor of 2.13 with 236 trades. This is a good indication of a profitable trading strategy, but it’s important to note that other factors such as risk management, trade selection, and market conditions can also affect the overall performance of a strategy.
- The fact that 75% of long trades and 77% of short trades were profitable is a good sign. It suggests that the strategy has a reasonable ability to select trades with favorable outcomes, at least over the period covered by the data. However, it’s worth noting that the data only covers a relatively short time frame, so it’s possible that the strategy may not continue to perform at the same level in the future.
- The fact that the best trade was $12,355.98 and the worst trade was -$9,082.30 indicates that the strategy has had some large winning and losing trades. This suggests that the strategy is capable of generating significant profits, but also carries a significant level of risk.
- The fact that the best trade in terms of pips was 88.3 and the worst trade was -94.3 suggests that the strategy is targeting relatively small price movements. This is consistent with the strategy’s low daily and monthly gains, which indicate that it is not taking on excessive risk in order to generate returns.
- The average trade length of 19 hours and 19 minutes suggests that the strategy is making short to medium-term trades, rather than holding positions for extended periods of time. This could indicate that the strategy is attempting to capture small movements in the market, rather than relying on longer-term trends.
- Overall, the additional information you provided reinforces the impression that the Global G7 Combo Forex Trading Strategy is a moderately low-risk strategy that is focused on generating small, consistent gains. While the strategy has had some large winning and losing trades, it appears to have a reasonable ability to select profitable trades over the period covered by the data. However, as with any trading strategy, past performance is not a guarantee of future results, and it’s important to continue monitoring the strategy’s performance over time.
- To calculate the Sharpe Ratio, you would divide the average daily returns by the standard deviation of the daily returns, and then subtract the risk-free rate of return
- Here is the calculation:
- The average daily return can be calculated by multiplying the daily gain percentage (0.05%) by the balance ($20,112,344.45), as follows: Average daily return = Daily gain % * Balance Average daily return = 0.05% * $20,112,344.45 Average daily return = $10,056.17
- The standard deviation of the daily returns is given as $2,218.389.
- The risk-free rate of return is typically considered to be the return on a risk-free investment, such as a U.S. Treasury bond. However, as we do not have information on the specific time period covered by the data, we will use a common proxy for the risk-free rate, which is the yield on a 3-month U.S. Treasury bill. As of February 28th, 2023, the yield on a 3-month U.S. Treasury bill is 0.04%.
- With this information, we can calculate the Sharpe Ratio as follows: Sharpe Ratio = (Average daily return – Risk-free rate) / Standard deviation of daily returns Sharpe Ratio = ($10,056.17 – 0.04%) / $2,218.389 Sharpe Ratio = 4.52
- A Sharpe Ratio of 4.52 indicates that the strategy is generating a significant amount of excess return per unit of risk, as compared to a risk-free investment. This is a very high Sharpe Ratio, which suggests that the strategy is performing very well, at least over the time period covered by the data. However, as with any trading strategy, past performance is not a guarantee of future results, and it’s important to continue monitoring the strategy’s performance over time to ensure that it continues to meet your goals and expectations.
Trading Risk Disclaimer
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Futures trading involves the potential for substantial risk of loss as well as substantial gains, and is not suitable for every investor. The highly leveraged nature of futures trading means that small market movements will have a great impact on your trading account and this can work against you, leading to large losses or can work for you, leading to large gains. If the market moves against you, you may sustain a total loss greater than the amount you deposited into your account.
You are responsible for all the risks and financial resources you use and for the chosen trading system. You should not engage in trading unless you fully understand the nature of the transactions you are entering into and the extent of your exposure to loss. If you do not fully understand these risks you must seek independent advice from your financial advisor. All trading strategies are used at your own risk. It is your responsibility to confirm and decide which trades to make. Trade only with risk capital; that is, trade with money that, if lost, will not adversely impact your lifestyle and your ability to meet your financial obligations.
U.S. Government Required Disclaimer – Commodity Futures Trading Commission. Futures and options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN