I have tested a good number of trading strategies 200 times at this point.
But I just tested a strategy that gave the highest win rate out of all the strategies we have tested so far.
The strategy I am talking about is the Aroon indicator trading strategy.
This indicator shows two lines that move in a zigzag-like pattern.
At first glance, the lines can look like nonsense.
But they show some really interesting and useful things.
For example, the two lines of the Aroon indicator are called the Aroon up line and the Aroon down line.
On this chart, you’ll notice how these two lines are moving parallel to each other.
The orange colored Aroon up line is moving in a downward direction.
The blue Aroon down line is also moving in a downward direction, and it is parallel to the orange line.
Even here, the two lines are moving in the same direction without touching each other.
You can see it happening on the right side as well.
These lines are moving in the same direction, parallel to each other.
When there is a parallel movement, the indicator says the price is most likely moving in a range or sideways.
On this chart, that’s exactly what’s happening.
The first useful thing this Aroon indicator shows is where the price is ranging.
But things get even more interesting.
Aroon says that when the two lines are far away from each other and are not crossing, something like this, then there is a strong, one-sided momentum going on.
The price is in a trend.
But it becomes even more useful.
It says that when the Aroon up line, which in this case is the orange line, is above the Aroon down line, which in this case is the blue line, then there is an uptrend going on.
As you can see on the chart, there is definitely a strong upward trend going on.
When the Aroon down line is above the Aroon up line, there is a downtrend going on.
On this chart, that’s exactly what’s happening.
So this indicator not only shows us if the price is ranging, but it also shows us if there is a trend going on.

On top of that, it becomes even more useful by showing the trend direction directly.
It’s like a useful 3-in-1 indicator.
But does it make money?
If I take 200 trades with it, what will the win rate be?
Will it blow up the account or make a lot of money?
Well, this is what the Aroon trading strategy looks like.
And this is how I have tested it 200 times.
You see, this indicator’s values range between 100 and 0 percent.
When the Aroon up line reaches the 100% value and the Aroon down line is at the 0% value for the first time, something like this, I took a long trade at the closing price of the candle.
But there is one problem.
You see, since this indicator shows strong, one-sided momentum when the two lines are far away from each other, an entry taken like this after a strong momentum will not have a good place to set the stop loss.
So we will make use of the parabolic indicator to set the stop loss.
This indicator shows dots below and above the price.
If the price is moving in an upward direction, the dots will appear below the price.
This makes it perfect to set the stop loss.
And to make sure we take trades in the direction of the long-term trend, we will only buy if the price is above the 200-period moving average.
And we will only sell if the price is below the 200 EMA.
When the Aroon indicator shows an uptrend by expanding its lines completely, we will take a long entry at the closing price of the candle and set the stop loss below the Parabolic S-A-R indicator if the price is also above the 200 EMA.
I set the profit target at 1.5 times the stop-loss distance or used a 1.5-to-1 reward-to-risk ratio while testing.
The thing is, I have tested this indicator a hundred times in a previous video.
And there, it only had a 40% win rate.
Since the reward-to-risk ratio was 1.5-to-1, the breakeven win rate was also 40%.
So the Aroon trading strategy in the last test, with its 40% win rate, didn’t make or lose money.
Its profit graph was moving sideways.

But that was in a mostly good market, where the price was mostly trending and had a little bit of choppy, slow movement in between when the trend was reversing.
But what will happen if I take 100 trades in an extremely good market?
How high can the win rate go if the price movement is really good?
On top of that, what will happen if I take another 100 trades in an extremely bad market?
How low can the win rate go if the market conditions are really bad?
Well, to find out, I went to the Gold/USD one-day time frame and added a 9-period EMA to the chart.
When the price was clearly staying above this 9-period moving average, I saw it as an excellent uptrend.
In the “extremely good market” test, I only took trades where the price was clearly trending above this 9 EMA.
If the price was not clearly staying above the 9 EMA, I drew red boxes around it and saw this as a bad market for the trend-trading strategy.
In the “bad market” test, I only took trades where I drew red boxes.
Since Gold/USD has been moving in an uptrend in the long run on the one-day time frame, I only took long trades in that trend’s direction.
But the one-day time frame was only used for the “good” and “bad” market filter.
My entry time frame, where I took trades with the Aroon indicator, was 30 minutes.
So this is what happened when I took trades in the extremely good market.
You know how I said this indicator’s lines move far away from each other when there is a strong momentum going on?
Well, since we are taking trades after we spot a strong momentum in an uptrend, many times the long trades are taken near the top of the trend.
Personally, in an uptrend, I like to take trades near the bottom of the pullback or when the price moves down a little bit.
Since this Aroon trading strategy gives an entry point at the top of the trend, it’s similar to a breakout or a momentum-continuation strategy.

In simple words, we are expecting the strong momentum to continue even higher after we have taken a trade at the top of the trend.
If you have watched my other videos, you will notice that this momentum breakout setup is like the Bollinger Bands breakout strategy, where we took trades when the Bollinger Bands said the upward momentum was way stronger.
That Bollinger Bands Breakout was actually the highest-win-rate strategy we have seen so far in the extremely good market.
That momentum breakout style of trading gave a really high win rate when the trend was really strong.
But the reliability of the Bollinger Bands breakout trades was relatively low because that strategy was spamming trades quite frequently.
The trades were, like, a few candles apart.
Since this Aroon trading strategy was giving entries very similar to that Bollinger Bands breakout strategy, it had all those same spammy problems.
But still, just like the Bollinger Bands strategy, the Aroon also got a really high win rate of 64%.
Last time, the win rate was 40% in the mostly good market.
So this 64% win rate is a really big improvement.
The profit graph went in an upward direction pretty nicely.
But did the strategy just get lucky in a good market, or is this strategy actually good?
To find out, first we need to take 100 trades in the extremely bad market.
Do you remember that I said this strategy got the highest win rate of all the strategies we have tested so far?
Well, I was not talking about the good market win rate.
That’s right.
This is the first strategy in this extreme series that managed to make a decent profit in the extremely bad market.
The profit graph went up strongly at the start.
For comparison, most strategies move in a downward direction from the start in the extremely bad market.
This strategy started making a profit quickly.

Then, in the middle part, the profit graph started moving down, and I thought maybe the win rate would be around the breakeven point and the profit graph would become flat.
But near the end, it managed to make more profit.
At the end, the Aroon strategy got a 44% win rate, which is above the 40% breakeven win rate.
It made a profit on the account, even in the bad market, where most strategies would have blown up the account.
But there is a twist as well.
If you pay close attention, you will notice something interesting.
To show you what I mean, let’s give it a TR score, or the Trading Rush score.
In the “mostly good market” test, the Aroon trading strategy had a 40% win rate and got a 4-out-of-10 score in the win rate category.
The ease-of-use score was 6.8 out of 10.
Other than that, it had a low score overall.
But in the “extremely good market” test, since the Aroon trading strategy got a high 64% win rate, it gets an 8-out-of-10 score in the win rate category, which is a pretty high score, but not the highest score we have in this extreme testing series.
For comparison, the lowest win rate score was 0 out of 10, and the highest win rate score was 9 out of 10.
So this 8-out-of-10 score Aroon’s strategy got is pretty good.
The ease-of-use score stays the same at 6.8 out of 10.
As for reliability, this indicator is not that reliable because it gives entry points in a spammy way.
It gives entry points after every few candles.

I mean, in the extremely good market, it was identifying the strong momentum and the slow, ranging market nicely.
But when it comes to entry points, it is not that reliable.
Entries after every few candles feel like we are getting a random entry point in a strong momentum.
It’s like the indicator gets lucky by spamming trades.
Since the profit graph was moving in an upward direction pretty consistently, it gets a 7 out of 10 in the consistency of profit category.

As for the quality of trades, it gives entry setups like the Bollinger Bands breakout strategy.
That strategy gave an entry every time there was an increase in the momentum.
If that’s what you want to trade with the Aroon indicator as well, then the quality of setups are pretty good.
But since it spams trades and the entry point is many times taken at the top of the trend, I am not going to rate it too high.
It gets an 8 out of 10 in the quality of trades category.
The similar Bollinger Bands breakout strategy also had an 8-out-of-10 score.
The highest score we have seen in the quality of trades category is 9 out of 10, and it is mainly achieved by strategies that don’t spam trades.
That brings the total TR score of the Aroon indicator in the extremely good market to 35.8.
The highest score so far in the extremely good market is 39.4.
So this 35.8 score the Aroon strategy got is not that bad.
There are four strategies that are better than this in the extremely good market so far.
But in the extremely bad market, things get even more interesting.
The Aroon strategy managed to get a 44 percent win rate, which is actually the highest win rate a strategy has achieved in an extremely bad market.
Since it spams trades, you can say this strategy got lucky with the winning streak.

This last upward spike on the profit graph happened because it managed to capture a short-term, strong upward move where it won trades back-to-back.
In reality, you are not going to take trades in a spammy way.
If we ignore this last upward spike, then the profit was turning out to be pretty flat, looking like the win rate was going to be around the 40% breakeven point.
In fact, the profit graph of the previous good market test, where it got a breakeven 40% win rate, looks very similar.
There, the profit line went up initially, then went down towards the breakeven point, and then went up near the end.

But the only difference that time was that it also managed to move down back to the breakeven point.
Overall, it was moving in a sideways direction.
And to me, this 44% win rate profit graph of the extremely bad market also looks like it’s moving in a sideways direction.
I would say the reliability of the Aroon indicator in the bad market is low, and you are more likely to get a breakeven win rate with this indicator.
It’s not actually a bad thing.
We have seen multiple popular strategies in the bad market test that sucked so badly that their profit graph was straight up going down like a downtrend.
You will have a much higher probability of blowing up your account with those popular strategies.
In comparison, the flat profit graph of the Aroon indicator means that at least you will have a much lower probability of blowing up your account, even in the extremely bad market, with this indicator.
So it gets a 4 out of 10 in the win rate category, which is actually a good score in the extremely bad market test.
The ease-of-use score stays the same at 6.8 out of 10.
The reliability and the quality of trades score is 4 out of 10, which is once again a good score in the extremely bad market.
For comparison, the lowest score in the quality of trades category in the bad market is 3.3 so far.
The score of 4 out of 10 is actually the highest score in the bad market.
Only three strategies have scored that high so far.
That brings the total TR score for the bad market to 19.8.
The interesting thing is this is the highest TR score a strategy has achieved in the bad market.
In the mostly good market, the Aroon strategy was nowhere near the top.
There were many strategies that performed really well.
In the extremely good market, Aroon did pretty good, but there were others that did even better.
But in the extremely bad market, Aroon performed the best out of all so far.

You can say the main thing Aroon has going for it is that it has a lower probability of blowing up your account compared to some of the other popular trading strategies we have seen so far.
When it comes to price analysis only, the Aroon indicator is definitely useful when it comes to identifying the strength of the momentum and the direction of the trend, or if the price is ranging or not.
Since this is an ongoing testing series, let’s see if we find a trading strategy that makes money even in the bad market without spamming trades.
Thanks for watching!