1. Introduction

The Monthly Profit Daily SMA Strategy first popped up on ForexFactory thread #600112 back in 2016.
It runs on the D1 daily chart, and you only need roughly 15 minutes to analyze charts once each daily candle closes. That’s why part-time traders love this method.

In this post, I converted the creator’s loose manual trading rules into clear, automated MT5 logic.
Every backtest uses identical Exness market data and execution settings. I tested five common assets: EURUSD, GBPUSD, USDJPY, USTEC and XAUUSD.

2. Original ForexFactory SMA5 Strategy Rules

I restate all rules exactly as the original author wrote them, without changing his core trading logic. Any vague manual instructions get clear numerical standards so backtests run evenly every time.

Core Indicators

  • SMA 5: Tells us the main trend direction
  • Bollinger Bands (optional): Helps pick entry points and set exit levels

Basic Trading Rules to Follow

  • Only trade D1 charts. The original author warns lower timeframes like H4 don’t work well here.
  • Skip all trades when price moves sideways in a tight range.
  • Risk control rule: Don’t tie up more than 5% of your account on one asset, and never hold more than two open trades on a single instrument.

How To Filter Trend Direction

  • Only take long trades when SMA5 slopes upwards
  • Only take short trades when SMA5 slopes downwards
  • Ignore all trade signals if SMA5 sits flat with no clear bull or bear trend

Entry Rules

Long entry: The closed bullish D1 candle’s body crosses above SMA5, and the candle never touches the upper Bollinger Band.
Short entry: The closed bearish D1 candle’s body crosses below SMA5, and the candle never touches the lower Bollinger Band.

Stop Loss Setup

For short trades: Place your SL 15 pips above the previous candle high.
For long trades: Place your SL 15 pips below the previous candle low.
If the latest D1 candle has an extremely small range, use the second last daily candle to set your stop loss instead.

Dual Position Multi-Tier Exit Plan

Every valid trade signal lets you open two separate positions, each with its own exit rules:

  1. First position: Close it fully the same day to lock small quick profits
  2. Second position Option 1: Hold for longer trends, and trail your SL based on key support and resistance levels
  3. Second position Option 2: Close the trade once price hits the upper or lower Bollinger Band
  4. Second position Option 3: Close after 3 straight profitable D1 candles, targeting a standard 1:3 risk-reward ratio
  5. Hard Exit Rule: Close all trades once the trend flips fully against your position

Ambiguities in the Original Strategy Rules

This strategy gives traders a complete manual trading outline, but several unclear rules cause inconsistent results between different people. These blurry details also make it tough to code clean automated backtests.

  1. The original post never names a fixed take-profit target for the first same-day position. It only tells you to close the first lot intraday, with no set pip or profit goal to follow.
  2. The rule about closing after three profitable candles is just a rough visual shortcut for hitting 1:3 risk-reward. In real market moves, three straight trending candles don’t guarantee you’ll hit that 3x profit target. During slow low-volatility trends, three winning candles may only deliver tiny gains and force you to exit too early.
  3. This strategy relies fully on your eyes with no hard number rules. It tells you to avoid sideways markets and trail stops off support/resistance lines, but never gives clear measurements for range size, consolidation length, or valid D1 price levels. Two different traders will spot totally different trade setups as a result.

I added fixed numerical rules to cut down human subjective bias when coding automated tests.
All assets follow the exact same backtest rules, no exceptions:
1. Only check trade signals once a D1 candle fully closes to avoid fake signals and repainting issues.
2. Only allow one entry signal per single daily candle.
3. Set the first position’s take profit at 2x the stop loss size. Leave the second position open until price touches the Bollinger Bands.
4. Every other rule stays exactly the same as the original creator’s design.

3. Standard Backtest Configuration

Every historical test runs on raw Exness market data. Spread, slippage and tick execution stay identical across all assets so we can fairly compare performance.

  • Timeframe: D1 (Daily)
  • Test window: July 1, 2021 — July 1, 2026
  • Starting account balance: $10,000
  • Leverage: 1:100
  • Fixed trade size: 0.1 lots on every single position
  • Execution mode: Every tick simulation + minor random server delay + real Exness spread and slippage values
  • Assets tested: EURUSD, GBPUSD, USDJPY, USTEC, XAUUSD
  • Position sizing rule: We use 0.1 lots on all instruments

Quick Note: Fixed lot sizes create different dollar risk across pairs, indices and gold because each asset has unique pip value and volatility. I chose static fixed lots for unified testing benchmarks. The original manual strategy does not include dynamic risk position rules, so I left them out of the backtest.

4. Full Backtest Performance Results

4.1 Performance Summary Table

This table shows 5 full years of trading data, including total trades, win rate, profit factor, max drawdown and final profit/loss.

Asset Total Trades Win Rate Profit Factor Max Drawdown Net Result Quick Verdict
EURUSD 422 45.26% 0.90 25.62% -$1386.20 Negative Expectancy
GBPUSD 462 42.64% 0.90 28.99% -$1827.84 Negative Expectancy
USDJPY 434 40.55% 0.75 47.14% -$4156.57 Severe Negative Expectancy
USTEC 448 45.54% 1.05 6.76% $284.16 Barely Profitable
XAUUSD 405 49.88% 1.22 62.06% $12898.54 Profitable With Extreme Drawdown Risk

4.2 Cross-Asset Performance Breakdown

The test numbers make one thing clear: this SMA5 daily strategy only works well on specific assets, not all markets.

EURUSD, GBPUSD and USDJPY lose money over the full 5-year test window. Their profit factors sit below 1.0, which means this SMA and Bollinger Band combo never gains a reliable edge on these three instruments. USDJPY performs the worst of the forex group, with a profit factor of just 0.75 and a maximum drawdown exceeding 47%, delivering a total net loss of over $4,100 across the backtest period.

USTEC barely scrapes out tiny profits over five years. Even a small bump in live slippage or trading fees would flip those small gains into steady losses, though it boasts the lowest drawdown (6.76%) among all tested products.

XAUUSD is the only asset that generates substantial long-term profits, with a near-even 49.88% win rate. That said, the strategy hit a 62.06% maximum drawdown between December 2025 and February 2026 amid volatile market stretches. That massive drop shows extreme volatility risk when trading gold with this strategy during wild market swings, even if the account fully recovers and finishes with strong positive returns by the end of the test period.

To sum it up: The SMA5 daily setup fits gold’s long, steady trend behavior perfectly, but it struggles severely with the range-bound swing patterns you see on standard forex majors and tech index USTEC only yields negligible marginal gains.

4.3 Equity Curve Overview

Click to View EURUSD Equity Curve EURUSD Equity Curve
Click to View GBPUSD Equity Curve GBPUSD Equity Curve
Click to View USDJPY Equity Curve USDJPY Equity Curve
Click to View USTEC Equity Curve USTEC Equity Curve
Click to View XAUUSD Equity Curve XAUUSD Equity Curve

5. Strategy Strengths & Data-Based Limitations

✅ What Works Well

  • You only need 15 minutes each day to analyze charts, matching exactly what the original creator designed
  • The SMA5 + Bollinger Band setup is super simple, new retail traders can learn and trade it manually fast
  • USTEC carries far milder drawdowns, no catastrophic account wipeouts compared to forex & gold
  • Layered exit rules include breakeven protection to limit floating losses when price turns against you

❌ Weak Spots

  • This strategy never generates reliable long-term profits on EURUSD, GBPUSD and USDJPY; all three forex pairs end deep in losses
  • USTEC returns are way too small to count on for steady live trading income
  • Gold faces brutal drawdowns during high-volatility stretches, hitting a peak drawdown of 62.06% historically
  • The fixed 15-pip stop loss raises risk per single trade, making account drops worse during long losing streaks (USDJPY saw a max consecutive losing run of 17 trades)
  • It only performs well on specific assets; you can’t use this system reliably across forex, index and commodity markets as a one-size-fits-all tool

6. Final Neutral Conclusion

This SMA5 daily trend strategy from ForexFactory thread #600112 only fits certain assets, and it’s not a universal forex trading tool.

We ran 5 years of Exness backtests using a flat 0.1 lot size, and gold was the only asset that delivered meaningful consistent profits. Every major forex pair lost money long-term, while USTEC only generated negligible tiny earnings.

Even though gold turned a profit over the full test period, that massive 62.06% maximum drawdown across volatile market cycles is a major red flag. Anyone running this SMA5 strategy on XAUUSD needs strict risk control and mental stamina to sit through huge account dips.

This trading system works best as a dedicated D1 gold trend strategy. Don’t try applying all its SMA5 and Bollinger Band rules to mainstream forex currency pairs or tech indices like USTEC.

💻 Click to Download Full MT5 EA Source Code Download MonthlyProfit_DailySMA.zip