It always feels good to develop some model or system and have it work out on the first go-around. It’s also a great way to become disillusioned if you don’t accurately track the future
After I made the call for 1.11 before 1.13, the chart played out pretty flawlessly.
I didn’t trade the m30 here, just using it as a way to get the chart to fill the space between entry and exit and have some info to play around with. Most people agree that you should use the higher time frame to guide direction, and the smaller time frame to fine-tune. Great. I used the HTF to determine where the max tp/sl should be. The question then becomes how do you enter?
Something that I’ve implemented in my style of trading that I think is critical is that I don’t use the same entry system in the LTF that I do in the HTF. So while I might be using trend lines in the LTF, I’m not using it to initially determine a target in the HTF. The second part is that even in the context of the LTF, I’m not using most of the entry systems as entry systems. They’re used as confirmation points. So in the example of the trend line break (1), I’m not using the break to enter, I’m using it to gauge if there is enough supply/demand at that level to break it down. In (2) there’s some SR and a little head and shoulders pattern, and (3) is a simple trend line break. My problems originally using these systems were that they were incredibly difficult to measure in terms of actual entry, as well as R:R and everything was “hindsight 20-20”. But now I use that hindsight as an indicator that the trade is going my way.
This has been a breakthrough because of the following hypothetical. Let’s say I used HTF to determine that direction should be bearish. If I take the trend line break as my first short trade, and I want that traditional “good” R:R ratio, it’s possible that I would have been stopped out in the creation of the H&S pattern later. If my long term direction is short, it makes no sense to exit in the first hour and a half of the break. The break is super clean and fast, and I would have immediately trailed the stop or moved the stop to BE.
Trade 1: null
Then the next 2 entry points probably play out okay, given that the stop is sufficiently far enough (which is decreasing the reward:risk ratio now).
Trade 2/3: 1-2 winners
In the next trade, the breakout is great but since it’s a momentum play, the RR isn’t great here.
Trade 4: 1 winner with meh R:R (half a winner)
In this scenario, given that I even had the foresight to know that I would have 4 cracks at this, I would have ended up with anywhere between 1.5-2.5 solid trades. Similar versions of this very hypothetical have happened to me too many times, so I had to work on a new method to deal with it.