My Weird Strategy

I think Greg is rightly referring to the reality that trading on M1 charts is extremely inadvisable for beginners, that makes success terribly unlikely.

The person in the videos used M4.
Why don’t you recommend M1 for beginners?

Because of high noise and many transactions, in general everything under M15 you can call a fast trading. When you got driving license will you go to the Paris - Dakar Competition next day?

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As a passenger! (Do they have passengers? If not, then as a commentator. :taxi: )

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they have a pilot but even pilot has to be experience

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Oh
Yeah, that is true

After my lacklustre GBP/USD backtests, I’ve started looking to add extra confirmations before I open trades. This is a list of all of them

Divergence

When indicators (RSI, MACD, Stochastic Oscillator) give results contrary to what is on the chart

The chart was making lower lows, which usually means the downtrend is going to continue. When the chart made these lower lows, the stochastic oscillator was making higher highs, signifying that a trend reversal was imminent.

Candlestick Patterns

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I’m not sure, but that may be a Fair Value Gap (I say “may be” because I’ve seen one in its natural habitat before). There’s usually a bearish candlestick pattern as well on the level for the up fractal
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Usually, there is a bullish candle stick. In this case, there is a Morning Star Engulfing
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In this one, there was a bullish Marubozo

I’ll wait till I see about 2 of thess signals before I enter the trade

I have observed more confluences
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In the first rectangle, there are 3 bullish candles (3 white soldiers) of equal size, which is an indication of bullish movement in the market.
In the second rectangle, there are 2 bearish candles, and the second candle has no wick at the bottom of it, which is a strong bearish sign. I’ve noticed that whenever I see good trades, there are strong candle stick patterns around the levels that I marked for the zones
The last signal is a divergence. The market is making lower highs, but the stochastic oscillator is making higher lows, which is a strong bullish sign and an indication that the market trend is about to reverse.

If anyone knows any other bullish and bearish chart patterns, let me know

This is usually considered the “authority source”: https://thepatternsite.com

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I think I’ve optimised the strategy parameters to the max because any further tweaking in order to increase the win rate of the strategy will either lead to it not actually increasing the win rate or it misses AMAZING trades altogether.

Moving Average

9 SMA
28 LWMA, hlc/3(Typical Price)
200 EMA

Stochastic Oscillator

8 Slowing
16 %K
3 %D

Timeframes

Daily - Analysis
M6 - Confirmation
M2 - Confirmation
M1 - Entry

These may be the best settings because after comparing the results of the infamous first GBP/USD backtest to the 2nd one. I’ve noticed that the last 4 days of the 2nd coincide with the first 4 days of the 1st. The net loss at the end of those 4 days on the 1st backtest was -$66 while on the second one, the net profit was $321 Which is a very surprising difference.

But I think the biggest weakness of this strategy is highly liquid and volatile markets like crypto. What I usually do to find if a pair is good is go to the daily, pick a random day and see how many good trades I can find. I repeat this 3-5 times and if the winrate is less that 50%, it is most likely a bad pair. I did this for bitcoin and I only had about 1 good trade out of 4.

Maybe someday the best settings will be found for markets like cryptos but as for now, I’ll be focusing on forex unless somebody know of any crypto with forex-like movement.

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There are two problems, here: the first is that win-rate doesn’t necessarily determine whether or not it’s a “bad pair”; the second is that your sample size is WAY too small and has no statistical significance.

This signifies nothing. What matters is more like whether you have 100 good trades out of 400.

Sorry that I sound so critical! That’s not my reason for posting. It’s just that a few people have tried explaining this and related things to you, but you don’t yet seem to have taken them on board at all, and I’m sure we’re all actually trying to help you! :slight_smile:

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I understand the thing about my sample size being to small but when you’re strategy involves you seeing setups 99.9% of trading days, looking for trades on days that are far apart from each other should still allow you to draw the same conclusions you can from a backtest that spans over 200 trades.

But this style of thinking seems flawed and I can attest to this because randomly picking days may lead to me only picking the “bad eggs” thereby painting a false picture that I’ll then show other people and make them believe a lie that was created because I was getting unlucky.

While I can see the importance of extensive backtests spanning hundreds of trades, I still think that the strategy has some weaknesses that will show in small sample sizes that will only become more obvious when you test on a larger scale.

As for the part about the bad pair, that may have been an error on my end because using that same analogy, that would also make GBP/USD a bad pair as well according to the first backtest I did on it but I’ve now discover that the market conditions just weren’t favourable at the time and the indicators needed a bit of tweaking :upside_down_face:

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The sooner you change your mind about that belief, the sooner you’ll be moving more reliably towards profitability (and I’m saying this as someone who thinks the principles of your system look good, and logical, and that you deserve to do well with it).

The problem with - excuse me for saying it bluntly - your current lack of appreciation of statistical significance and probability is partly the fact that it can lead you mistakenly to look no further at something that might actually turn out to work well, if only you had the knowledge, understanding, techniques and software (not expensive at all!) to analyse it adequately rather than “just guessing” (which is what you’re actually doing at the moment - sorry!!) :blush:

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Okay fine, since I am a beginner in the field of trading and I want to be the best trader I can and the only way I can do that is by listening to other successful traders, I will only draw conclusions from extensive backtests with a minimum of 100 trades from now on.

Now with that out of the way, does anybody have any more constructive criticisms :upside_down_face:

What do you do right now is overfitting. btw you should not touch time frames below M15.

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Why shouldn’t I touch timeframes below M15
Also, what is overfitting

3 days ago I answered to first question. Overfitting is adjusting strategy settings to history data to achieve better results, overfitted strategy will not work in live trading .

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Okay, what about the timeframe part

Because of high noise and many transactions, in general everything under M15 you can call a fast trading. When you got driving license will you go to the Paris - Dakar Competition next day?

you even reply to it

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I get the part about the high noise and why you won’t recommend it to beginners, but if you got a driving license to be a F1 driver, you train like an F1 driver.
When you’ve completed the driving test, it is assumed that you already know how to drive and how everything (or most of the things) in a car works
If a beginner wants to be a serious scalper, they’re not going to be swing trading on the Daily timeframe on their demo account, they’re gonna be glued to their screens, taking at least 100 trades per day.
While I do agree with the fact that it is easier to watch and analyze when little movements aren’t making it move around so much, everyone has their own specific way of trading the same market, even if they are using the same strategy with the same rules, so recommending a timeframe to a beginner that doesn’t suit the trading style they have in mind would probably do more harm that good.