Would you guys call this a good Z pattern?
*Confirmation candle low was broken
*Channel lines connect
RONi, you could have traded that of of structure. if you look at it, you can see price was making lower highs and lower lows and gave you a nice high test candle/pin bar to go short. [B]the z pattern was just a confirmation for me.[/B]
I traded it as it was a perfect Z in my opinion. Others would disagree but the proof is in the pudding. I took profit.
Best
Roni
Hi Roni,
3 months in, and my stats tell me 68% success rate.
Average of 4.6 trades per week.
I’m very aggressive with my compounding when using a strategy that I have proven with my own stats. I risk 50% of the profit on the previous trade… Not suggesting you do that though. At least not until you’ve got some proven stats behind you.
Keeping a journal and stats is one of the things every trader reads about and pretty much every trader ignores…
And in my opinion, it’s one of the most important things to do.
Not only noting what DID happen, but what might have happened.
For example, you might put your SL 10 pips above/below the last candle in the Z pattern [as I do], but also record what would happen if you only put your SL 1 pip above/below.
This way, you are constantly refining and improving, but keeping the core strategy in tact. That’s just one example.
Keeping your own stats is absolutely VITAL!
CHF/JPY 1 Hour. I entered this trade yesterday and it hit TP while I was sleeping. Notice how it just barely reached my TP and then pulled back. Profit was +44 pips.
I did some quick backtesting this weekend on the 6 Hour time frame. I would like to share the results.
- Backtest only from 05-Jun-2014 to 10-Oct-2014.
- Only on 6 Hour time frame.
- All 28 pairs from the 8 major currencies: AUD, CAD, CHF, EUR, GBP, JPY, NZD, USD.
- Z pattern was considered valid only if it had a minimum profit potential of 25 pips and it had a minimum R/R of 1 : 1
- Entry price, SL, and TP used as instructed by Kasravi. However, I added 5 pips to SL and to entry price for spread and buffer.
Here are the results:
- 30 valid patterns completed.
- 12 patterns were invalidated before the entry price was hit. Invalidated because the low or high of the pattern was taken out before entry.
- 9 winners for a total of 653 pips (average 73 pips). One of the winners was very big for 205 pips. If this one is not counted, the average win is 56 pips.
- The 9 winners in pips were: 205, 112, 112, 48, 44, 42, 36, 28, 26.
- 9 losers for a total of 276 pips (average 31 pips).
- The 9 losers in pips were: 37, 37, 36, 33, 30, 30, 30, 24, 19.
- No pair had more than 2 valid pattern completions.
- The following pairs did not have any valid pattern completions during this period: AUD/NZD, AUD/JPY, AUD/USD, CAD/JPY, EUR/AUD, EUR/CHF, EUR/USD.
This is all of the backtesting I will do for the 6 Hour time frame. I will probably do some backtesting on the 4 hour time frame. In the meantime I will continue live trading the 4 Hour and 1 Hour time frames.
I hope this helps,
Hector
superb findings ! if you are using just classic tp. 205 pips is pretty high ! from the result net pips for this period would be about 400 pips+ . 9 winner 9 loser but due to good R:R we manage to end up positive.
I want to do h4 backtest as well 
shall share result once i done it
im still looking for broiker that offers me mt5 for all timeframe especially h6 h8 h12… i downloaded mt5 but i cant seems to find different time frame … advice anyone?
Hi Hector,
Good for you for being willing to put some work in.
However, what I would recommend you do is add some more columns to your spreadsheet where you show % of account risked, $ risked, % gained/lost and $ gained/lost.
You see, pips mean nothing.
The ONLY thing that matters is the return on your account.
If you take the trouble to do this, you might be surprised at what you find…
Those timeframes are there as standard in MT5. However, you may have to right click on your toolbar in order to make them all visible.
hey thanks for the tips … >.<!
Last night I also entered AUD/USD 4 Hr and hit TP for +59 pips. I placed my orders even though R/R was less than 1 : 1.
I understand. I didn’t start planning a full blown backtest. I was just messing around with a few charts. My main objective was to get an idea how often the Z patterns form and the typical size of the winners and losers.
If I plan a proper backtest, I will incorporate some of your suggestions. Thanks for the input.
Hector
CHF/JPY 1 Hr. I took this trade although it is not exactly a valid Z pattern according to Kasravi’s rules. Note how the line is not completely contained within the channel. I was persuaded to enter the trade by the pinbar at the top of the pattern against a resistance level of about 112.72. I did use the Z pattern rules to set my entry, SL, and TP.
Ok guys,
Im thinking of investing about $5000 into trading this Z pattern, if I trade a R:R of 1:2, the risk say is $50 for a profit of $100. Nail a good 10 trades a month thats about $1000 excluding losses. What do you guys think? Should I take out more time to trade smaller amounts or is it safe to start trading with bigger capital?
Regards,
Ron
Ron,
What is your Win % since you started trading Z Patterns? How many winning trades do you average per week or month? What is the size of your average winner vs. the size of your average loser? Are you consistently profitable?
Just asking to see if your expectations are in line with your actual results to date.
Hector
I don’t see any patterns forming on the 4 Hour or 1 Hour charts this morning so I’m finished trading Z patterns for the week.
Results for this past week: 3 winners for +155 pips, 1 loser for -39 pips. Net profit +116 pips.
Good luck,
Hector
Hector,
You stress not placing orders unless they are R:R of 1:1 being the bare minimum so why did you not
take heed to your own advice on this one? Just curious.
Also will be posting up the results of all trades taken via the Z patter shortly.
Best
Hi Ron,
PLEASE DO NOT TRADE WITH THAT SIZE ACCOUNT!!!
Keep that money to one side and use a tiny account with micro lots.
If you trade that $5000, I will ABSOLUTELY guarantee what will happen.
It will be one of two things:
You hit on a few winners and increase your lot size. This next deal will be a loser. A BIG loser. So you will try to get it back. But you won’t. You’ll lose even MORE.
or:
You skip the winning streak and just get losers. Then you increase your lot size to get it back… and…
Either way, you’ll end up with a LOT less than $5000.
Stick to a small account until you can take deals without any emotion attached, KNOWING that your edge will play out over the long run and the result of this trade really doesn’t matter - it’s just one of a series of trades that will eventually lead to you being net profitable.
After EVERY trade, whether a winner or a loser, take some time away from your platform. Having a big win is the most dangerous thing you can do. Your confidence will soar, and you’ll blow the lot.
Again, I’m not preaching. Just trying to help. And I’m not saying this stuff is specific to you. It applies to anyone trying to make a living in this crazy game…