Cold Turkey or Golden Goose? USD/TRY system short in play…..

The US dollar/Turkish lira has been a system trader’s dream lately. My multiday (MD) system has managed to rack up some 40% of average yearly profits of the past four years in the first six weeks of 2016. Quite impressive. The contrarians out there would no doubt be warning of the increasing likelihood of seeing a period of drawdown in this system but who am I to say “how high is too high?”

To get an idea of the kind of market conditions which are ideal for this system one could examine the price action of USD/TRY for the year to date. The pair started the year at 2.9150, rallied to around 3.0630/50 and fell all the way back down to around 2.8900 and is currently trading around 2.9350. No major trend in play there. I would have to say the system falls into the ‘pattern recognition’ category rather than the ‘trend following’ one as the proprietary entry criteria are for the most part derived from my ‘Break and Retrace’ trading methodology.!/c1usl.

A recent example of the kind of price move the system is designed to capture can be seen on the bearish price swing at the end of January where the system went short around the 3.0160 level. As this is a multiday system the position was held for a number of trading days with partial profits taken at various levels on the way down to the month-end ‘close’ near 2.9550 when the time based stop kicked in, called “TIME!”

It remains to be seen whether the system will continue to produce steady gains over the next few months but for my part I will continue to bet on this Golden Goose…..

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