Hello everyone,
Today I decided to conduct a little experiment with one of the setups I was following: in hopes of fine-tuning the entry signal, I am experimenting with candle-breakouts as opposed to reversal formations. It’s basically the same swing-trading approach (bounces off levels of support/resistance in the direction of the main trend) but a tad more aggressive, seeking to enter the swing a little bit earlier. This would serve two purposes:
- Squeeze few more pips out of every swing
- Reduce the stoploss
However, I am still not comfortable enough to trade live with this new method so I “demo” it. Today I decided to record one of these tests for the hell of it - it was a pretty dull day anyway :p The entry was actually very well-timed as I managed to hop onboard right at the beginning of the swing. Later on, the trade was stopped out at breakeven (as I type these lines right now it would be sitting at +75 pips, but oh well!) but I am actually rather satisfied with the entry. I will keep on experimenting with this method and I will keep you folks posted.
Down below you can watch the video of that experiment and the second video shows the rest of the setups I had on my Watch List for the day.
If you liked this video, please rate it at YouTube - click here!
If you liked this video, please rate it at YouTube - click here!
26 October, 12:43 am
Hector, your demo trade today is actually my method of trading using candlesticks as reversal signals in the direction of the main trend. I prefer it for the exact reasons you gave because I get into the move earlier and my stop losses are much tighter since I make my entries off of the 5 or 15 min charts so you know immediately if the trade is going to work. Your demo example with the GBPAUD was a High Close Doji reversal signal and entry can be made just below the low of the bar with a stop just above the bar or some more conservative traders wait one bar for confirmation before taking the trade. The HCD and LCD are very good signals as well as the green hammer. Red hammers are often sucker bets. Good trading!
26 October, 10:42 am
Hello James,
I am glad to see that other people have thought of this. I am a little bit unsure about this method yet and further demo-testing is required on my end. In one hand, it does indeed reduce the stoploss size, but it the other hand you don’t quite wait to get the price reversal confirmation as with my regular entry method, which makes the entry a little bit riskier.
So what I am trying to study is whether decreasing the stoploss is worth the extra risk of not waiting for price confirmation. I still gotta run more tests before I can make up my mind on this topic.
-HECTOR-