Friday 22nd of April

Good morning folks.

I hope you’re all well!

I’m currently in quite a deep backtest session as you may have noticed and quite enjoying life there.

I have created a script indicator that I find quite interesting, if it’s something that interests you, let me know in the comments!

Anyway,

FX Trade Update

Gold + 2R

You probably know that my trading plan calls on my to take my wins at 3R instead of 2R so why change that? I know the overall return is better off when I take my profit at 3R

However, in rare occasions, I’ve come to notice that if we see several rejections from a key level I’m better off adapting my plan.

You can notice we rejected this area four times recently, which is usually a good sign of interest in this area.

Coul I hold the position for the entire time? Yes, I still think it has a 50% chance of reaching my TP even tho we have a strong support just below us.

However, I think there’s a 50% chance that we could reach my stop at breakeven –> Which means the expected value of holding was 1.5R –> when by closing it when I did my expected value was of 2R.

Obviously, we can never really know what the exact odds are. I can however tell you that in 28% of the time price reaches 2R in a backtest of over 350 trades it goes back to BE rather than reach the 3R –> So in those circumstances, it remains worthwhile to keep holding

2 Vs 0*0.28+3*(1-0.28)

2 Vs 2.16

In this case I estimate the odds of a reversal to be higher than on average. Hence my decision to close the position early

While I can’t remember the quote properly it goes something like this

To become a master,

You first have to learn the rules,

You then have to apply and internalize those rules,

Once you are a master,

You know when to ignore your rules

– Me butchering a Quote

Anyway, I’m definitely no master, but I’ve mastered my trading plan, I know the numbers I have found in my backtest etc etc so I’m allowed to break them.

When you begin, just stick to them.

Please

Trust me on that one. I can tell you exactly how to trade, make it 100% mechanical, and yet you won’t succeed if you don’t follow my trading plan up until you’ve mastered it.

Well that was a darn long tangent, but I think it was an important one.

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Good thing I don’t have many urgent tasks to get done today that took me a while

FX Watchlist

CAD/CHF

Canadian Swiss reached our area of interest yesterday however it sadly didn’t provide us with an entry that fit my trading plan.

It remains on my watchlist in case we have a clear double top and an entry by Monday night, otherwise I’ll remove it

EUR/USD

Euro Dollar is also on my watchlist for a potential long. While it’s not the cleanest trendline, indeed it’s definitely more of a phase line & a clear correction it does still kinda fit my rules so sharing the chart in case you’re interested

GBP/AUD

Pound Aussie reached the area of interest however, it still needs to reach the weekly stack before I am interested in a potential short

USOIL

Clear price action above the area of demand. I’m just being patient

I hope you enjoyed today’s post!