Welcome to Forex Backtest Friday.

In the previous post, I tested the Ichimoku Kinko Hyo indicator and found it to be reasonably effective on a few currency pairs.

To recap, here are the results for the GBP/JPY (including spread costs) over the past 11 years:

  • 1 hour chart: 79.7% gain
  • 4 hour chart: 51.9% gain

Having established a base level of profitability, the next step is to be a little more discerning about the trades being taken.

One of the suggestions in the comments section was to add a Kumo qualifier, where a buy trade is only taken above the Ichimoku cloud, and a sell trade is only taken below (thanks Zippy Bronstein!).