I wanted to give the computer a worst case scenario for the first time. So this version of the beep boop indicator, is basically a histogram of the MACD indicator. To make things even more difficult for Bill the computer, let’s tell him to trade on a 1 minute chart where spreads will be a lot bigger. And while we are at it, let’s tell him to take one trade every minute. Now you might think that bill the computer will lose this way, well you are not wrong, but remember, bill the computer has a trick up his sleeve. Since Bill is like a beginner trader who doesn’t know anything about money management in trading, when he gets angry after seeing negative profits for a long time, he will increase his position size by 10 times. The only way bill the computer is going to make a profit, is if he gets angry in a range, and if the price makes a move in the entry direction after that. So what do you think is gonna happen? We are intentionally setting the odds against bill the computer to see what happens, or maybe improve it in the next try.
In this version bill the computer is continuously looking for the beep boop indicator. If it sees that the last closed bar is green in color, and if the bar before that is also green in color, it tells the broker to take a long position. If he sees that the bar color is red, and if the bar before that is also red in color, it will tell the broker to take a short position. Usually it will do this with a calm state of mind. But while executing the trade, if he notices that the profit is negative for a long period of time, there is a chance that bill the computer can get angry and take a long trade if the last closed bar is green, or take a short trade if the bar is red. You can see if the trade was taken with a calm state of mind, or an angry state of mind on the right side on the screen.
Since this is a demo account for obvious reasons, I set the account size to almost half million. Since bill the computer is taking trades every minute, a bigger account will help with its higher margin. After failing 60 times, when I started the experiment where everything was working as expected, the beep boop indicator was giving red bars. At first, Bill the computer was calmly taking trades, but after seeing a negative balance in his account, he got angry and took some really bad trades. It risked 10 times more than usual. This went on for a while, but in this version, since we didn’t tell him to take trades in the direction of the trend, bill the computer took trades, but the price went sideways. Most of the time when bill the computer risked 10 times more after getting angry, the price went sideways. But at one point after a range market, price did make a move down, and bill the computer was in profit at one point, but it only lasted for two candles because price then reversed completely. When few green bars appeared on the beep boop indicator, bill the computer had to close all the trades. In the first test, bill the computer didn’t make any profit. One of the reasons it didn’t make profit, was because we didn’t tell him anything about the trend direction.
So I took a break from this project, and came back a few days later. This time, I modified the beep boop indicator to only give entry signals in the direction of the trend. This time, the green candle only appears if the price is above the 50 period exponential moving average, So this time bill the computer will take trades in the direction of the trend. Furthermore, this time I started this experiment during the overlap of the London and New York session, because price action during this overlap is a lot better and price has a higher chance of making a big move during this overlap session because of the increased volatility. If you don’t know anything about market sessions in trading, checkout the best time to trade video on the Trading Rush channel. This time when I started this experiment, the price was in an uptrend and the beep boop indicator was making green bars. As usual, bill the computer was risking 10 times more when he got angry. But this time, bill the computer only got angry once. It was at the beginning when he was in a loss, but after that, since we were testing during the overlap market session where spread was a lot smaller, price kept going up and bill the computer kept making profits. At one point, bill the computer was up by around 1300. When few red bars appeared on the beep boop indicator, bill the second closed all of his trades with a total profit. Furthermore, it looks like bill the computer exited the trades at the right time, because the price made a big move down. This time, the beep boop indicator we created for this fun experiment, gave good entry and exit signals. Does this mean the beep boop indicator has potential? Well, maybe I should test it 100 times in future Trading Rush videos to see if it works or not in the long run, so subscribe and ring that notification bell to see that. If you want to try out the beep boop indicator, maybe I will share the code on the Trading Rush Patreon Page for free. You can simply go there using the link in the description and checkout how it was written for free without becoming a patron. But if you do want to see the in-depth trading analysis on the trades that I took, maybe consider becoming a Patron at Patreon. Thanks a lot for watching!