Free Forex Strategy Review – 4hr Outside Bar Part 1

Welcome to the third video series in which I give you an over-the-shoulder look at how I backtest and improve mechanical trading strategies.

In this first video I begin to code and test a free trading strategy found on the Forex Factory forum.   It’s a strategy for trading Forex on a 4 hr timeframe.  In this series I am testing USD/JPY.

The Rules:

Long Trades:

• The setup bar has to be above the 30 period EMA on the 4hr chart
• The setup bar has to be an Outside Bar
• The setup bar has to close above the open
• If all conditions are met then buy the next bar at the open

Short Trades:

• The setup bar has to be below the 30 period EMA on the 4hr chart
• The setup bar has to be an Outside Bar
• The setup bar has to close below the open
• If all conditions are met then sell short the next bar at the open

Stop losses and Exits were a little vague.  So I plan to test a number of different methods I know have proven to work for different strategies in the past.