Backtest Result for Midnight Hunter Scalping Strategy XAUUSD | 5min TF | 80% Win Rate | 549% ROI

Hey everyone, welcome to another video. In today's video, we will go through the back testing of the Midnight Hunter scalping strategy that we explored in our last video. Uh, we will go through the setups uh that presented itself based on the strategy and the rules. I've also prepared an Excel sheet with all the trades. Uh, we will be looking at those trades and a summary of the entire back test and see how the risk management plays an important role and this is going to be very crucial. And finally, we will also run a trade simulation based on these setups and see how successful this strategy actually is. Stay tuned till the very end because it does get interesting. So firstly, I would like to mention I'm using a cleaned version of the Midnight Hunter indicator on uh TradingView. As you can see, I have adjusted it based on some of the flaws that I saw in the original indicator that how the three engulfing candle uh was not getting printed correctly. So I went to Cursor and I updated the code, trimmed it down to only see uh the lines for the channels and only the candles which were correctly printed. So that's it. And if you would like to have access to this indicator, what I've also done is I have uploaded it on GitHub. So I will share the link in the description. You can go on GitHub and you can simply copy the code, create a new indicator, and use it for yourself. All right, let's get started. In this video, we will be looking at gold at the 5-minute time frame. As I'm currently on the free plan, I can only go back as much as 5th of April as of uh this date of recording. So [snorts] we will be looking from 5th of April until today, which is almost 30 days, which is a good time frame for us to see how the strategy performs. And by the way, I have already calculated a total of 29 setups that have appeared during this time frame. So, we will be just quickly skimming through them, and then we will look at an Excel sheet that I prepared with all the details of these trades. Okay, so the first one over here on 6th of April, we see the price is in divergence. We have a higher high, but the RSI is lower over here compared to the one on 6th of April at 1:15. So, we get the three engulfing candle, bearish. We enter at the close of it. However, this one, it's a losing trade. And on this candle, at the close of it, we would exit. We have another opportunity right after a few candles. And in this situation, we enter at the close of this candle. And I've already checked uh the close does not happen above our stop loss, so we are good to go. The price comes down. Eventually, it goes up first, then comes down. When it hits the standard deviation one, at that point in time, we become risk-free. So, our stop loss moves to our entry. The price goes on to touch standard deviation two, further 2.5, and then takes out and our trade closes because we would have already moved our stop loss to standard deviation one when we hit standard deviation two. So, we close the trade over here. Moving on, uh here is another trade. So, the price goes up, and we have a RSI divergence, as you can see. We have the three uh engulfing candle, which presents itself over here. So, we draw the fib, and from here on the price goes up, hits standard deviation one at this candle. We cut our stop loss moves to break even. Further down, when price hits standard deviation two, we move it back we move it further to standard deviation one. We book 50% of our profits over here and then the price goes back up and we close the trade. This one is another trade. However, in this situation uh it's a break even set up because when the price hits standard deviation one, we already moved our stop loss to entry and then price goes back up and we close that trade. So, no profits booked in this one. Let's see an example of a long trade, I believe. These are again short setups, successful one. The fifth trade we eventually hit the fourth standard deviation, so that's good. On sixth one we actually hit standard deviation two and then close out when the price moves back on standard deviation one. I'm moving on. Another short setup, same conditions. Over here the price goes to 28.66 and then price actually is lower than this one. So, we have a RSI divergence. We get the three engulfing candle, bullish one. We enter standard deviation one, standard deviation two, back to standard deviation one and we close 50% of the trade once the price reached at standard deviation two and the remaining stopped out at standard deviation one when the price came back. Uh this was a losing setup, so there it is. This one, good setup. We eventually hit standard deviation four, so booked all the profits. And I And you would see that when we eventually hit either of those key levels, uh standard deviation one, two, uh we respect those levels. When the price comes back and take us out, we close the trade. We do not keep it going on forever. So, that is what we need to make sure that the discipline of trade management is practiced. Uh this is a break even. It comes back to one standard deviation one, goes back to entry, and we close out. With standard deviation four, we hit standard deviation four in both of these. Let's have a look at this Excel sheet. It contains all the trades uh that we just saw on TradingView, all the setups that started from 6th of April until 5th of May. What type of trade it was, whether it was long trade, short trade, entry time, exit time, duration, when did we hit uh standard deviation one on a particular setup, which also means uh that was the same time we went uh we were risk-free in that trade. What was the highest point from and the entry point from which uh we drew the Fibonacci, and the standard deviation calculation for standard deviation one, two, 2.5, and four. At what position we would have taken off our profits. So, when the price hit uh standard deviation two, we would book 50% of our profit, 25% of our profits when uh price hit standard deviation 2.5, and the remaining 25 or the rest of the position on standard deviation four. So, they're all adjusted based on how the price reacted during that setup, and this is what the dollar movement we would have got for each individual price points, standard deviation two, 2.5, and four for that particular position. This is the assumed risk. So, basically when we enter a position and initially when our stop loss where our stop loss is uh how much we would have risk risk based on our capital and where the stop loss was from our entry. And this is the actual risk, so how exactly the price fluctuated once we entered. For this trade simulation, what we have done is we have assumed that we will be using a very low risk. We will start with a balance of $10,000 uh on a hedging account which has 1 to 200 leverage and based on our risk setting, we will just simply begin with taking a micro lot, which is 0.10. Based on this, if we simulate how exactly this trade would have performed, we would have incurred a loss. And similarly, for the rest of the trade based on where the positions was closed, we have all the details of all the trades. And if we look at the summary, it's quite interesting. So, this is a very conservative or very low risk approach. So, even if we see the assumed risk that we have per trade, and this is the average of all the trades that we see over here, is 0.77% starting with a balance of $10,000. And the actual risk that we assumed was only 0.43%. Overall, based on all the trades, we would have made $2,317, which is 23% roughly 23% uh profit. And in terms of overall overall trades, we would have won 18 of our trades, break even on six trades, and lost five of the trades. So, based on percentage wise, if we calculate this with a combination of win and break even because we're not losing money over here, it is 82.8% and that is not bad for this strategy. And now here is the most interesting part. Everyone would not have the risk capacity or the risk tolerance to go low risk. What if someone wants to have a little bit higher risk? So, what we would do is we will just double the our risk factor and rather than taking uh 0.10 position to begin with, we will start with 0.20. And you see, all the numbers changed. Do you remember the outcome of the trade would not change because that is not dependent on what lot size you trade with. And similarly, earlier where our risk levels assumed and actual risk was below 1%. Now, our assumed risk is at 1.53% but actual risk is still at 0.87%. Similarly, our returns have now increased because our risk factor uh increased. So, on a capital of 10,000 by 29 trades, we would have made $5,074, which is roughly 51%. Interestingly, let's increase the risk factor and see if we would assume even more risk. Our assumed risk becomes to be 3.06% and our actual risk is 1.74%. Our returns is now at 123% based on 29 trades. So, we would have made $12,266. And if you want to be absolutely aggressive in terms of risk, let's have a look at that. So, we will start with $10,000 and begin with a uh single lot uh standard lot, which is one. And based on this, the numbers are even more interesting. So, our assumed risk is, which is significant, I would say, per trade 7.65% actual risk is 4.34%. We would have made $54,873, which is a return of 549%, and that's massive. So, irrespective of how the status of the trade would have been, the way you manage your lot size also dictates how you manage your risk. This is completely based on your own preference, how much tolerance do you have for risk? If you want to be aggressive, sure. But, you need to know that per trade you're risking almost 8% of your capital, which I would say is very high. If you can have a combination of both of these, you don't want to be very risk averse, but you don't want to be too aggressive as well. I would say, let's just go with safest approach in the middle and start with 0.2 lot size on a starting balance of 10,000. But, let's also change the balance as well. Let's say suppose you don't have 10,000. What if you only have 1,000? So, even on 1,000, you would have made $505 based on a medium risk setting, which is still a good return of 50% over 29 trades over a month. That is not bad at all. Also, to talk about the overall drawdown, again, it is related to how much risk do you adjust or how much lot size do you trade with. Changing this back to again to 10,000, and you would see, um, on a medium risk setting, your actual drawdown on your balance is 2.4%. If you want to be very risk averse with a low risk setting, it's only 1.2%. And if you are too aggressive, the most aggressive, it's 11.8%. So, that is how your drawdown, your actual risk, your assumed risk, and your returns are related to how you look at your lot size based on what capital you're trading with. So, with an overall returns ranging from 23% to 549% the results are really good and with a win rate of 82% the strategy is actually quite good if you can just simply follow the rules make sure that you are not hoping that the setup would play in favor of you, but you follow the rules when the setup hits a standard deviation one, you move your stop loss to break even and if it takes you out, it takes you out. You don't have to hope or pray that it will eventually go in your direction because you will have opportunities nonetheless and once you do that and I and I feel anyone could if they just trade with discipline and the rules that they have set from the for themselves, this is quite achievable. So, I hope you like this video. Please do comment if you would want to see or which pair you would be using this strategy to trade on and or if you would first back test on a particular forex or gold or crypto and how does the result look like? Until then, see you in the next one.