I took 100 Trades with the moving average channel strategy to find its win rate, and this is what happened.

If you have watched the previous video, you most likely know how to create this ridiculously simple moving average channel. But you see, this moving average channel looks very similar to the Keltner Channels, and in both Keltner Channels and the Moving Average Channel Strategy, we buy and sell when the price opens and closes above or below the channel respectively. If that’s the case, we should expect the Moving Average Channel to perform just as good as the Keltner Channels right? Well, this is what the profit graph looked like when we took 100 trades with it on the Trading Rush Channel. It got a 49 percent approximate win rate, and that is a profitable win rate because the reward risk ratio was higher than one. But if you look closely, you will notice that the Keltner Channel made a good profit at the beginning, then gave back the profit and made a loss, and then the profit line went back in the upward direction again. When I took 100 Trades with the Moving Average Channel on almost the same market structure, the profit line went in the upward direction just like the profit line of the Keltner Channels, but it never lost multiple trades in a row.

Even though the two indicators look similar, many times the Moving Average Channel was giving better signals than the Keltner Channels. Furthermore, the Moving Average Channel gave earlier entry signals, which was a good thing in this case, and filtered some of the false signals since the moving average channel is narrower than the Keltner Channels.

For the first 75 or so trades, the profit in the Trading Rush App was going consistently in the upward direction, and the win rate was around 58 percent. So far these ridiculously simple moving averages that never touch each other, were performing as good as some of the highest win rate strategies we have seen so far. Till the 75 trades mark, the moving average channel had won 9 trades in a row, and only lost 5 trades in a row. But unfortunately, it lost 15 trades in a row soon after the 75 trades mark.

Here’s what it means. The Moving Average Channel performs just as good as some of the best trading strategies for the most part, but its biggest weakness is when the price gets choppy and breaks above and below the channel in a short period of time. The narrower channel that was the reason for earlier and better entry signals than the Keltner Channels, was the reason for too many signals in a row when the price was choppy in a slow trend, especially just before the trend reversal.

The Moving Average Channel Strategy with a 1.5 to 1 reward risk ratio, got an approximate win rate of 48 percent, which actually is very similar to the Keltner Channels Trading Strategy. However, the profit graph on the same market structure was pretty different. On one side, we have Keltner Channels that gives late signals, especially near the end of the trend, and on the other side we have two simple moving averages that give better entry signals, but can’t handle choppy slow-moving markets.

5.8+7+4.5+4.5+6.5

The Moving Average Channel Trading Strategy gets a TR Score of 28.3 out of 50, and ranks 19th from the top, above the Keltner Channels Trading Strategy, and below the Bollinger Bands Strategy.

That’s all.