Head & Shoulders

Sep 17

Hello traders this is my head and shoulders back test I usually back test my strategies every 3-6 months because they usually change and I often adjust them. This back test is based on Major pairs only from 2023-2024
For my head and shoulders strategy to be effective I will be implementing a few rules:

• For TP Hit I will measure if the head and shoulders went as far as the height from the right shoulder to the neck.
  
  
• I will not be including trades such as these .where the breakout was due to high impact news.
  
  
  
• I will only be taking head and shoulders with a horizontal neckline only
  
• I will be focusing on 1h tf
  

The ones I wouldn’t take in real trading:
Here are some of the trades that I wouldn’t take in my real trading, some of these trades have a tilted neckline while some have a wrong shoulder to head ratio.








Fake out:

TP hit:



















SL HIT:














Conclusion:
Head and shoulders when paired with trend lines:
When I paired my head and shoulder with trend line breakout it has proven to be very powerful.

Ranging markets:
This strategy is a reversal strategy so it doesn’t work well when we have ranging markets even the head and shoulders indicator is having trouble identifying head and shoulders. The strategy does not perform well in NZDUSD Because it ranges quite a lot which indicates that this strategy can not be used on weak forex pairs such as EURGBP.





The minimum number of trades considered to be a good back test can be 100 to 200 trades my back test is way below the recommended mark. There are certain key points to note:
I used data from 2023 to 2024 only
I back tested only Major forex pairs
I used only Head and shoulders that broke not the ones that failed to even breakout eg:


approximate win rate 58%