MGV

MGV

28-04-2022

05:25

Backtesting the “Kairos Pause” Indicator – Author: @KairosCharts Before diving into details about the strategy implemented, first I’ve gotta develop a bit on this momentum oscillator built by Kairos.

Now: how to use the Kairos Pause?

Nevertheless, I didn’t want to backtest the indicator by itself since I wouldn’t implement that into my system. I wanted to determine how much confluence it could add to my interpretations from price action. What did this strategy consist of?

When backtesting, you want to be as precise as possible with details (these are the ones that will allow you to find flaws in the model). And something I tend to do is grading my setups. For this strategy I used the following scale (+ the key to understand the acronyms)

You want to make sure your backtests are as close to reality as possible. For this purpose, you also must set rules for the setups you are going to test. In this case those were:

After the rules are defined, you now need a set of parameters to record data from your trades. Here, I used the following: •Trade No. •Timezone at entry •Setup Key •Grade •W/L •Total R •Length •Setup chart •Result chart •Comments

Combining these parameters allowed me to determine which combination of factors was the most/least profitable, giving me confidence in some setups and caution in others. Mixing this data will allow you to play setups with conviction. Now, the data collected from the backtest:

Let’s start with some setup exhibits:

B+ Setups: After-Hours + QM + PA+ KP/KR Volatility and volume tends to be low during off-session trading, thus one of the reasons these turned out to not be that reliable. •Setup N. 18 – Result: +2.94 R •Setup N. 47 – Result: -0.46R

C Setups: Weekend + QM + PA+ KP/KR These delivered the longest losing streak from the sample (-6R), but testing them allowed me to define the following rule: “Max size on weekends: 0.5%” •Setup N. 15 – Result: +3.7R •Setup N. 34 – Result: -1R

As you can see, the strategy doesn’t have a 100% hit rate, but that’s not what trading is about. Let’s analyze the results after 50 trades were collected:

Performance Results:

Conclusion:

If you enjoyed this thread, please leave a like/retweet and drop us a follow at @Chroma_Trading . This type of content takes a lot of time to put together and I’d appreciate any kind of support. Hope you find it useful. Best, MGV



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