Strategy guide
How to build a strategy that survives live trading
Most strategies fail before the first trade — because the indicators overlap, the chart is too fast, or the reward target needs a win rate no market gives you. This guide is the checklist we used to design our live strategies.
Step 1
Pick the chart length first
The timeframe decides how many trades you'll see, how much history you can test on, and how much the spread eats from each trade. Faster is not better — it's just busier.
Fast charts (15–30 min)
Many trades, but only weeks of real history to test on and the spread takes a much bigger cut. Our GBP/USD 20-minute strategy is profitable — but it took hundreds of simulated trades to confirm, and it only earns ~0.2R per trade.
Middle charts (1–4 hours)
The sweet spot for testing: years of history, a manageable number of signals, and the spread is small relative to the target. Our gold 4-hour swing strategy has the fattest edge we've measured — about 0.19R profit per trade over two years.
Slow charts (daily+)
Very reliable signals but very few of them — a strategy might fire once a month. Fine if you're patient; painful if you want to judge it quickly.
Rule of thumb: test on at least 30 trades before you trust a result. On a 20-minute chart that's about two months of data; on a 4-hour chart, aim for a full year or more.
Step 2
Choose indicators that measure different things
The most common mistake is stacking five indicators that all say the same thing — three moving averages, a MACD and a momentum oscillator are all "is the price moving up?" A confluence score built from duplicates isn't confirmation, it's the same opinion counted twice.
The six checks we use
Each one measures a different dimension: trend, momentum, bias, volatility and exhaustion.
Price above/below the 50 EMA
The intermediate trend line. Signals only count in the direction the 50 EMA is pointing.
MACD histogram side
Momentum agreeing with the trade direction — histogram above zero for longs, below for shorts.
RSI side
RSI on the matching side of 50. Avoids taking buys while momentum is still rolling over.
Price above/below the 20 SMA
The short-term bias check. It keeps entries in line with the most recent price structure.
Standard deviation rising
Volatility expanding rather than squeezing — breakouts and trends need room to travel.
RSI not extreme
Skip entries when RSI is already overbought or oversold — the easy part of the move is gone.
How many checks to require
Requiring all six filters hard that you'll trade almost never. Requiring too few lets weak setups through. We require a majority — 3 to 5 of 6 — and always keep the trend filter (price vs the 50 EMA and the daily trend) non-negotiable.
Trend filter first, always
Before any indicator, decide which way the higher chart is going and only take trades that way. Our backtests show trend-filtered versions recover from losses that unfiltered versions keep. When we tested an AUD/JPY 30-minute crossover without enough filtering, it lost at every risk-reward setting — the pair ranges too much on that chart.
Step 3
Set risk-reward before you look at the results
Every risk-reward ratio carries a break-even win rate. Set the reward too far and even a decent strategy looks broken — because it can't hit the target often enough. This is the single most common reason a backtest "fails" when the setup was actually fine.
| Risk : reward | Break-even win rate | A realistic win rate | Rough result |
|---|---|---|---|
| 1 : 2 | 33.3% | 40% | +20R per 100 trades |
| 1 : 3 | 25.0% | 33–41% | +24R to +48R per 100 trades |
| 1 : 3.5 | 22.2% | 36% | +49R per 100 trades |
| 1 : 5 | 16.7% | 25% | +37R per 100 trades |
| 1 : 7 | 12.5% | 38% | +152R per 100 trades |
How to read this: a 1 : 7 target only needs to win 12.5% of the time to break even — but it also loses 87% of the time, which is mentally brutal and vulnerable to a losing streak. A 1 : 3 wins more often but needs everything else to be right. Our gold swing strategy runs 1 : 7 because its win rate holds at ~38%; our GBP/USD and AUD/USD 20-minute strategies run 1 : 3 and 1 : 3.5 because their edge is thinner and steadier.
Watch out for these
- •Bigger isn't better. We tested a 2 : 9 target across all eight majors: the win rate collapsed to 13% and the account went down 79.5R. The market rarely travels nine units of risk before hitting a stop.
- •Judge a strategy by R, not by win rate. A 33% win rate at 1 : 3 makes money; a 60% win rate at 1 : 1 might not. Compare net R over the whole test, per trade.
- •Match the pair to the target. Some pairs trend long; others snap back. Our tests showed the same strategy earns +36R on gold at 1 : 7 but only +10R on EUR/USD at the same setting.
Step 4
Validate before you trust it
- •Enough trades. Fewer than ~20 trades in a backtest is a rumour, not a result. A 7-day sample can look brilliant or terrible purely by luck.
- •Compare the recent window. A strategy can profit over two years and still be stale. Check the last 90 days separately — if it's negative there, the edge may have moved on.
- •Expect divergence when it goes live. Our gold swing strategy earned +62.8R over two years of history, but made −2.0R across 41 forward trades in a later 90-day window. Backtests set expectations; live results are the real test.
- •One pair at a time. Strategies are pair-specific. The gold version only ran on gold; when we widened it, the results thinned out. Test on the exact pair you intend to trade.
Ready to build yours?
The Strategy Builder runs your choices through real price history and shows the win rate, net R and equity curve before anything goes live. Members add it with the one-off Strategy Builder Pass.
Trading involves substantial risk of loss. Past results — including backtests — never guarantee future performance.