I’m playing around with a pullback strategy based on SW rankings, which looks promising so far.
I currently do my own SW analysis based on the same formulas Dennis uses in his SW thread. But I take it a step further and measure the % of change each day for each pair. This only takes a few secs extra to plug in.
Here’s last week:
What I am testing right now is trading the pullback on the strongest and weakest pair for each day. This would be a day trading strategy.
I have completed my analysis for June and have noticed something interesting. There is always a pullback, and it seems to occur within the first few hours of the New York session. This is only a 2 week sample, so take it with a grind of pepper.
On the left is all the SW stats.
On the right are 3 columns;
- ‘Daily SW’ (Matches the pair with the highest and lowest % of change for that day)
- ‘Retracement’ (Direction of trade entry)
- ‘Possible Pips’ (The maximum amount of pips the retracement trade reached)
How do you trade this?
Looking at the number of possible pips reached, most got over 30. So, one way would be to set a 50 pip SL and a 30 pip TP. That would have given you 120 pips last week (TP @ 30 pips x 9 = 270. SL @ -50 x 3 = -150).
A 30 pip TP would guarantee you a win most days, where a 50 pip SL would give you some breathing room while price decides which direction it’s going, along with the wider spread for that first hour.