Free forex trading strategies videos cristianos
Trade with Pat. Entrepreneur. Trader 13+ Years Forex Robot Nation VIP & Free Get started. gomi.orira.xyz VIP WINS ✓'s profile picture. How Forex Trades Think · ✔️We porvide high Accuracy Trade Setup ✔️Daily free signals ✔️Daily Trades idea's ✔️Daily Market Analysis ✔️Trading Analysis. I am also in the pipeline to share forex strategies for free. WildEagle. Published: Reply to the message. Hey. FINANCIAL CONTROLLER RESUME SAMPLE To take your look at the suggested by the clients, before taking a look at a wider look and a PUT. This article focuses. The server requires IM and Presence on a per user basis, regardless new interior, this to make the.
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The pros and cons listed below should be considered before pursuing this strategy. Scalping in forex is a common term used to describe the process of taking small profits on a frequent basis. This is achieved by opening and closing multiple positions throughout the day.
The most liquid forex pairs are preferred as spreads are generally tighter, making the short-term nature of the strategy fitting. Scalping entails short-term trades with minimal return, usually operating on smaller time frame charts 30 min — 1min. Like most technical strategies, identifying the trend is step 1. Many scalpers use indicators such as the moving average to verify the trend. Using these key levels of the trend on longer time frames allows the trader to see the bigger picture.
These levels will create support and resistance bands. Scalping within this band can then be attempted on smaller time frames using oscillators such as the RSI. Stops are placed a few pips away to avoid large movements against the trade. The long-term trend is confirmed by the moving average price above MA.
Timing of entry points are featured by the red rectangle in the bias of the trader long. Traders use the same theory to set up their algorithms however, without the manual execution of the trader. With this practical scalp trading example above, use the list of pros and cons below to select an appropriate trading strategy that best suits you.
Swing trading is a speculative strategy whereby traders look to take advantage of rang bound as well as trending markets. Swing trades are considered medium-term as positions are generally held anywhere between a few hours to a few days. Longer-term trends are favoured as traders can capitalise on the trend at multiple points along the trend. The only difference being that swing trading applies to both trending and range bound markets. A combination of the stochastic oscillator, ATR indicator and the moving average was used in the example above to illustrate a typical swing trading strategy.
The upward trend was initially identified using the day moving average price above MA line. Stochastics are then used to identify entry points by looking for oversold signals highlighted by the blue rectangles on the stochastic and chart. Risk management is the final step whereby the ATR gives an indication of stop levels. The ATR figure is highlighted by the red circles. This figure represents the approximate number of pips away the stop level should be set.
For example, if the ATR reads At DailyFX, we recommend trading with a positive risk-reward ratio at a minimum of This would mean setting a take profit level limit at least After seeing an example of swing trading in action, consider the following list of pros and cons to determine if this strategy would suit your trading style. Carry trades include borrowing one currency at lower rate, followed by investing in another currency at a higher yielding rate. This will ultimately result in a positive carry of the trade.
This strategy is primarily used in the forex market. Carry trades are dependent on interest rate fluctuations between the associated currencies therefore, length of trade supports the medium to long-term weeks, months and possibly years. Strong trending markets work best for carry trades as the strategy involves a lengthier time horizon. Confirmation of the trend should be the first step prior to placing the trade higher highs and higher lows and vice versa — refer to Example 1 above.
There are two aspects to a carry trade namely, exchange rate risk and interest rate risk. Accordingly, the best time to open the positions is at the start of a trend to capitalise fully on the exchange rate fluctuation. Regarding the interest rate component, this will remain the same regardless of the trend as the trader will still receive the interest rate differential if the first named currency has a higher interest rate against the second named currency e.
Could carry trading work for you? Consider the following pros and cons and see if it is a forex strategy that suits your trading style. This article outlines 8 types of forex strategies with practical trading examples. When considering a trading strategy to pursue, it can be useful to compare how much time investment is required behind the monitor, the risk-reward ratio and regularity of total trading opportunities. Each trading strategy will appeal to different traders depending on personal attributes.
Matching trading personality with the appropriate strategy will ultimately allow traders to take the first step in the right direction. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors.
We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances. Forex trading involves risk. Losses can exceed deposits. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. Live Webinar Live Webinar Events 0.
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Oil - US Crude. Wall Street. More View more. Previous Article Next Article. Forex Strategies: A Top-level Overview Forex strategies can be divided into a distinct organisational structure which can assist traders in locating the most applicable strategy. Forex Trading Strategies That Work Forex trading requires putting together multiple factors to formulate a trading strategy that works for you. There are three criteria traders can use to compare different strategies on their suitability: Time resource required Frequency of trading opportunities Typical distance to target To easily compare the forex strategies on the three criteria, we've laid them out in a bubble chart.
Price Action Trading Price action trading involves the study of historical prices to formulate technical trading strategies. Length of trade: Price action trading can be utilised over varying time periods long, medium and short-term. Starts in:. Jun Stay fresh with current trade analysis using price action.
And the account that compounded and adjusted the position size after every trade had the lowest amount of loss. After looking at all of this data, we can safely say that we have found the best compounding and adjustment method, but unfortunately, not everyone has the same win rate in trading.
The win rate in trading also depends on your Market View, on how good you are at identifying the good vs bad markets. Even the Trade Alerts I gave on Patreon had a higher win rate than this. In the fourth experiment, I simulated trades with no compounding on one side, and trades with compounding and adjustment after every trade on the other side. But what if your win rate is even worse?
With a 1. There is clearly a big difference. But after 5 experiments, we have enough data that says compounding and adjusting position size after every trade is not only better but adjusting position size when there is a loss significantly reduces the probability of blowing up the account.
So I will change my compounding method as well. I hope you learned something. Get trade alerts, see how I take high probability trades by supporting Trading Rush on Patreon. Thanks for watching. Read more. Tags best , buffett , compound , compounding , experiment , illusion , re-investing , reinvest , reinvesting , trading , trading strategies , trading strategy , warren , warren buffet , warren buffett. I would say the one magic wish most traders would like to be granted, would be to be able to see into the future.
Once Dennis and Eckhardt had shared their proprietary trading concepts, Turtle Traders were only allowed to trade for Richard Dennis and were not allowed to trade futures for themselves or others. Each student received 1 million to trade. Learning from a multi-millionaire and trading with his money? It was like winning a lottery. However, when the two weeks class started, one of the first topics the Turtle Traders were taught was not about the money-making strategy, it was about Managing Risk.
You see, Dennis understood probabilities and used calculated risks to his advantage. The strategies Turtle Traders were going to learn were high-risk strategies. There was no buying low and selling high, it was a high-risk high reward. So it was important for the traders to understand risk management more than anything else. Turtle Traders were also taught to disassociate the dollars from trading. But if the amount lost in dollars is high, then emotions kick in, and bad decisions are made.
Turtle Traders were taught to consider losses in percentages and not in amounts of money. Dennis and Eckhardt wanted their students to see trading as a probability game. Dennis since his early twenties believed that looking at the news for stock tips was not a good idea. If acting on the news was the real key to success in trading, everyone would be rich.
He wanted Turtle Traders to make their decisions by looking at the price directly. In simple words, Dennis would make money by holding long and short futures positions simultaneously. Turtle Traders on the other hand were trained to be trend-following traders. This shift in strategy was mainly influenced by Richard Donchian, who was a well-known trend trader with a positive record from the s to the s.
After losing money in the market crash of , Richard Donchian started studying Technical Analysis. The rule was pretty simple: When the price breaks above the high of the previous two weeks, you close your short position and buy. When the price breaks below the low of the previous two weeks, you close your long position and sell short. He also developed the popular Donchian Channel Indicator, and its trading strategy was one of the best strategies we have ever tested times on the Trading Rush Channel.
It ranks 2nd from the top on the TR Score chart. However, they still make money in the long run by taking trades in the direction where the price is already heading. Turtles were also trained to keep things simple, but Dennis and Eckhardt knew there will be mistakes and missed entries. If turtle traders made mistakes on regular basis, their probability of losing money, in the long run, will be high. So one of the main concepts Turtles were taught was to know their edge in the market.
See, trading is a zero-sum game. You either have to win more times than the other person to be profitable, or need winning trades many multiple times larger than the losing trades. If you win more trades, you can risk more on a single trade and still have a good probability of making money in the long run. If you risk more on a single trade and have a big losing streak, you will blow up the account. The idea was to catch the start of a strong trend and stay in that trend for as long as possible.
For example, if the price gives a day breakout in the upward direction, or in other words, if the price makes a move higher than the highest price of the previous 30 days, the Turtle Traders would buy. To exit a long position, Turtles had to wait for a breakout in the opposite direction. For example, price breaking below the 15 days low.
If the price gives a day breakout in the downward direction, or in other words, if the price makes a move lower than the lowest price of the previous 30 days, the Turtle Traders would go short. To exit a short position, Turtles had to wait for a long breakout. For example, price breaking above the previous 15 days high. The exact Turtle Trading Strategy is now protected by copyright laws, but basically, it was a breakout strategy that tried to take a position at the start of a new trend, no more complex than the strategies most traders use today.
Turtles were made very clear that if two traders with the same account size were facing the same situation in the market, they both should take the same optimal course of action. They both should place the same trade. Basically, Eckhardt and Dennis wanted their students to understand that they are not special and definitely not smarter than the market. They did not want Turtles to make decisions because they felt smart or lucky.
Since Turtles were told to exit trades when there was a breakout in the opposite direction, they had to watch 10 to 50 percent of their unrealized profit disappear before the exit signal appeared. This made sticking to the rules challenging for some.
But those who followed the rules remained in the experiment and made huge profits in the long run. In the next 5 years, the Turtle Traders with the Breakout Strategy ended up making more than million dollars in total. Several Turtle Traders after the experiment have gone on to have professional careers in trading. Richard Dennis and Turtle Traders showed that with the right mindset, with proper rules, proper money management, anyone can be profitable in trading.
I used the MACD strategy that got the highest win rate, the Volume Weighted Average Price strategy, and took trades near strong support and resistance areas with pretty much the same trading concepts taught by Richard Dennis to Turtle Traders:. Trade with the trend! We want to book more profits than the loss. We want to capture bigger profits when we are right about the direction and book smaller losses when we are wrong.
We want to know our edge in the market. Trading is a probability game. We want to know how many times we can lose in a row, so we can manage risk and not blow up the account. Remember, one of the first things Turtle Traders were taught was Risk Management.
And most importantly, we want to use the KISS principle as much as possible. Navy in The KISS principle states that most systems work best if they are kept simple rather than made complicated. Get Trade Alerts, see how I take high probability trades with the current best strategies by supporting Trading Rush on Patreon.
Thanks for Watching! Tags million , million , strategy , traders , turtle , turtle strategy , turtle trader , turtle traders , turtle trading , turtle trading strategy. Would you do me a favor? This is exactly what happened with many traders in February of In February , the price was at an all-time high, and many traders were looking for a discount. Many of these traders, are in-experienced and are most likely to lose money. I would like you to meet some of these traders and watch very carefully, how an event or a chain of events that follows have a big impact on their lives.
The price is near the period moving average, and Bill is about to take a long trade using margin. At the same time, Emma is doing research on the market. She discusses the stock market with her friends, and fears, when a random person on social media, says the stock market is about to crash. Both of these people, are in-experienced in this field and have little idea about what information is right, and where to get it from.
Both want to buy the stock market index, in the hope to make a decent profit. Bill buys because he thinks the price is at support, but Emma, decides to take advice from the television, and fears it might be a crash. By the end of March , the stock market index, was down more than 30 percent from the high. Many traders lost a lot of money, and people like Bill, who went long with margin, blew up their accounts.
Since margin is like a loan from the broker, in the wrong hands, margin trading can be quite devastating. By the time Bill had lost everything, Emma had done a little bit of research and was ready to take a position in the market. Since she is not an experienced trader, she too ends up taking a long position, with a high margin.
After April , the Stock Market Index starts moving in the upward direction with good momentum. By December , the price was already up by almost percent. If she had taken the long trade, just 30 days earlier, she would have blown up the account like Bill. Just one month, made a big difference, on how they are going to look at trading in the future. Even if there was no margin used while taking the trades, both Bill, and Emma, would have been sitting with a profit.
Since Emma bought late, at a better discount, she would have ended up with almost a percent gain. This raises an interesting question, and it was also asked on the Trading Rush Discord Server. If buying late can make more money, why not take every trade late?
According to the strategy, if we want to take a long position, we have to wait for the long MACD crossover. We have to set the stop-loss below the pullback of the trend, and use a 1. But instead of waiting and taking trades when the long MACD crossover happens, why not wait, for the price to move in the opposite direction a little after the entry signal?
Taking the entry late like this will obviously result in a smaller stop-loss, but that will turn the 1. See in trading, the reward risk ratio, and win rate, are inversely related. This means, if you increase the reward risk ratio, the win rate will go down, and if you decrease the reward risk ratio, the win rate will go up. Since the MACD strategy, with the 1. However, the counterpoint was, the price after the entry, goes in sideways, and in the opposite direction many times, and on top of that, there is also market noise.
So by waiting for the price, to move in the opposite direction after the entry, we will run the risk of missing out on some excellent trades, but if the price, moves in the opposite direction, we get a chance, to make 4 times more profit, than the risk. And then I moved the profit target closer, to make it a 1. But all of them will have different profit potentials. Which one of these entry methods, will make more money in the long run?
To find the answer, I am going to take trades, with each entry method. By looking at the reward risk ratio, you probably have guessed which one of these methods will give a higher and lower win rate. With a higher reward risk ratio, comes a lower win rate. And because of that, we can even guess, the number of winners and losers in a row, the strategy can have.
And because of that, we can guess, how much percentage of our account, we can risk per trade, to be profitable in the long run. If the win rate is low because the reward risk ratio is high, the strategy obviously, is going to have a bigger losing streak. Unfortunately, not everyone can handle losing multiple trades in a row. When a strategy is having 10 losers in a row, believing in that strategy, and the long-term picture can become difficult for many beginners.
For them, a higher win rate strategy is more suitable, and you get that higher win rate, by using a smaller reward-risk ratio. And we did. Other 34 trades reached the profit target before the price moved in the opposite direction. And that resulted in the highest number of losing trades in a row. Ask yourself, can you handle losing 20 trades in a row? For most of us, the answer is no. A smaller losing streak is much more preferable. If they both made pretty much the same amount of profit, is the high reward risk ratio, really worth it, when it makes you sit through a big losing streak?
We can see that the main strategy, not only performs better when it comes to the win rate but also makes way more profit in the long run. In this experiment, it made almost 2 times more money! Now ask yourself, which one of these strategies, and reward risk ratios would you like to use?
As for me, the answer is the smaller reward risk ratio, so I can win trades more frequently, with a strategy, that has a high probability of making money in the long run. Thanks for watching! Tags trades , best , best reward risk , best stop , profit , profit illusion , profit target , ratio , reward , reward risk , reward risk ratio , risk , stop loss , stoploss. This time I took more than trades in 48 hours so you can get a high win rate in trading.
What I am going to do is take 2 trades every minute for 48 hours straight. Since 2 trades every minute is a lot of trades, I am going to use the trading bot we made in one of the previous videos. In the first experiment, I am going to tell the trading bot to use the period moving average to find the trend, and then at every 60 seconds, take 1 trade in the direction of the trend.
Set a tight profit target so the trade is won easily, and set the stop loss 10 times farther. Basically, use a 10 to 1 risk-reward ratio. I told it to do this on 1 account first, and repeat the strategy on the second account. The theory is if what I am about to show you can actually increase the win rate of a trading strategy, the first account should perform better than the second account and should get a higher win rate.
How do I know the first account will perform better? I will show you by the end of this video. I will start the first experiment, and you keep an eye on the profit loss number as the trading bot takes new trades every minute. I gave a trade alert on Trading Rush Discord Server earlier to go short on this pair, so I am expecting the price to move in the downward direction on the good chart in the long run.
Now 1 hour has passed, and this time the bad market is the one with more loss. Interesting how 30 mins ago the bad market was sitting with a profit, but then it lost dollars quickly. If we look at the two accounts, we can see that the good market has made less loss in the long run. It lost so much money that it ran out of margin to take new trades with the same position size. On the other hand, the first good chart account had more money and was still taking trades. Our theory matches the practical results, but there is one thing I overlooked before starting this experiment.
You see, I told the trading bot to take trades in the direction of the trend and set 10 times bigger stop loss. But in reality, the 10 times bigger stop loss never got triggered even once. If you have a long position open and you send a new short order, you close the running long position. But even though we got the results just like we anticipated, the good account performed better than the bad account, it could have been just a fluke.
If you want to make sure something works, try it again and see if you get the same results. In the second experiment, we are going to take 2 trades every 1 minute, but this time only in a downtrend. Another 24 hours have passed, and what I am going to do is plot the balance on these 4 accounts using a chart and you will see something interesting.
The total balance of the two accounts in the first experiment kept going in the downward direction. Obviously, this is because we used a bad trend trading strategy. But just like we anticipated, the second account performed worse than the first. And we know this was not just a fluke because, in the second experiment, the same thing happened.
The first account performed better and the second account performed worse. But how did I know beforehand that the first account will get a higher win rate both times? These are the two charts I am going to run the experiments on and what we are going to do is draw over the price movement.
You see, the price in the forex and stock market moves like this. A zig-zag pattern that is either moving up, down or in the sideways direction. If you are using a range market strategy, then you want the price to make this kind of zig-zag pattern. Now one might think, both of these charts are trending. The first one is trending in the upward direction and the second is trending in the downward. So in theory, if we use a trend trading strategy on these two charts, we should get a good and similar win rate.
Most of the time the market is ranging and choppy. So instead of trading charts that are trending now, it is better to trade charts that will also trend for the most part in the future. How exactly do you find that? Before starting the experiment, to see if the chart has a higher probability of ranging or trending for the most part, I first opened the entry timeframe. In this case, it was the 1 min timeframe since we were taking trades every 1 minute.
Then I checked what kind of zig-zag pattern the price was making on the entry timeframe and made sure the direction of the price movement is not sideways. And then I checked what kind of zig-zag pattern is price making on the higher timeframe. Till now, there was not much difference between the two charts on the entry timeframe, but if we draw on the price movement on the higher timeframe, you will see something interesting.
The price movement on the two charts no longer looks similar. The zig-zag pattern on the first chart still looks like it is moving in the up or down direction, but the zig-zag pattern on the second chart is clearly moving in the sideways direction. The price has a higher probability of moving in the direction of the higher timeframe trend. If the trend direction of the higher timeframe, or in other words, if the long-term price movement direction is sideways, the price movement on the smaller timeframe will also be sideways for the most part.
If we go back to our entry timeframe and look at the price movement between the start and end of our experiments. You will notice that the chart that had a one-sided zig-zag pattern on the higher timeframe, also had a one-sided price movement on the smaller timeframe for the most part. Whereas, the chart that had a sideways movement on the higher timeframe, also had a sideways and choppy price movement for the most part.
In the stock market, when the price moves in the upward direction, people say the bulls have control over the market. When the price moves in the downward direction, they say bears have control over the market.
But when everyone has a mixed and no one-sided market view, the price stays flat as we see in the second chart. The chart where the higher timeframe market view was flat, got a lower win rate. Although these random trades showed us the data we were looking for, what I am going to do in the third experiment, is take the highest probability trades for 24 hours straight. If everything I talked about till now is correct, the win rate I should get after 24 hours should be high and the profit graph should look like this.
To find trades more frequently, I am going to use a smaller timeframe like 5 min as the entry timeframe, and then use a higher timeframe like 30min to see if the price movement is worth trading or not. Basically, I am using the period moving average on the entry timeframe to find the trend direction, and I am making sure the zig-zag pattern on 30 minutes higher timeframe is not moving in the sideways direction.
On this pair, the higher timeframe is not moving in the sideways direction, but the entry timeframe is. Moving Averages are lagging indicators, they show everything late. In this case, I know the price has started ranging because the price has stopped making new lower lows.
The price on this pair is good. The entry timeframe is trending in the downward direction and the higher timeframe is not moving in the sideways direction. Also, the price is near weak resistance. If you have seen the Live Trade Analysis Posts on Patreon or other videos on the channel, you know I also use the moving average on the higher timeframes as well. But to keep things simple in this experiment, I am only using it on the entry timeframe. Since this chart is good, I am going to take a short trade with a reward risk ratio of 1.
The trade will look something like this. We check back on this trade at the end of this video. On this pair the price on the entry timeframe is extremely good, but if you look at the higher timeframe, you will see that it is not exactly moving in one direction. There can be also situations like this, where the price on both entry and higher timeframe is bad. The price is moving in the sideways direction on the entry timeframe and has sudden big choppy moves on the higher timeframe.
This is not something we want. This chart is just like the previous one. The entry timeframe is ranging and the higher timeframe has sudden big moves. This chart is an interesting one. The price on the entry and higher timeframe is moving in one direction, but the quality of the trades on this chart will be low. A good clean price movement looks like this, but on this chart, the price movement is like this. On these kinds of charts, the probability of losing the trade increases, because when the price moves like this, the indicators become less reliable.
So I am going to avoid this chart even though the entry timeframe pullback looks like a good discount. Nothing is happening on this pair. The higher timeframe is ranging and the entry timeframe is not in a good trend. This chart is interesting. The price on the higher timeframe is moving in the upward direction. It is not exactly a good trend, but it is better than a ranging market. But on the entry timeframe, the price is moving in the sideways direction. Looks like the price broke below the period moving average.
But, I can see that the price found support from this area before. And as we have seen in the previous video, if the price found support from an area before, it can do it again. So what I am going to do is take a support resistance trade. In this case, a long trade at a support area. Something like this. We check back on this trade later. On this chart the price movement is excellent, but right now there is nothing to trade. We will wait for the price to give a discount.
In other words, a good pullback. This chart is probably the best of all. The price is reversing from the period moving average resistance in a strong downtrend. The higher timeframe is also not flat. What we are going to do is use the highest win rate trading strategy we have tested on the Trading Rush Channel. According to the MACD strategy, the entry is when the short crossover happens.
But if I enter right now, the 1 to 1 reward risk ratio profit target goes very close to swing low support. It is better to wait for the price to move in the upward direction. Actually, now waiting for the price to move in the opposite direction is not going to work because the price already made a good move in the entry direction.
This was an excellent setup, and the trade would have looked like this if the price would have moved in the opposite direction a little. After a few hours, I found two pairs where the price movement was good. We will use the Momentum Indicator to see the pullback reversal. The MACD gave a short signal above the moving average which is against the entry rules. We want the short entry below the moving average.
So what I will do is switch to one timeframe higher, and see if the price starts to move back in the trend direction. This was the 5 min timeframe, so one timeframe higher will be the 10 min timeframe. If the price goes back in the trend direction on the 5 min timeframe, MACD should give a short entry signal on the 10 min timeframe as well. We will take that entry instead. Unfortunately, the same thing happened again. The price made a strong move in the entry direction, just before the entry signal.
Now the trade is not worth it because the reward risk ratio is low. I found this chart with a strong downtrend. Since the price is moving strongly in the downward direction without giving any bigger pullbacks, we will use the Beep Boop indicator we made in the previous videos to take short trades. It has made money three times on this trend already, and if the downtrend continues, it will most likely make money again.
The Beep Boop indicator did give a good entry signal, and a few minutes later it did make money. The price touched the profit target easily. In total, I scanned over 10 charts multiple times throughout the day and was only able to find 3 setups that were actually good.
We were only able to find 3 good setups because there was not much to trade in the first place. We filtered out the bad charts and traded on the few good charts that we found. Remember, most of the time markets are ranging and not worth trading. So if you are finding trades every time you open your charting platform, you are most likely not filtering out the bad charts. The secret is the chart selection process.
In the first experiment, we saw how different charts can give different results. The bad chart that was looking like this on the higher timeframe, performed worse than the good chart that was looking like this. The practical results matched the theory, but to make sure it was not just a fluke, we ran the experiment again, and we got similar results.
Then in the third experiment, you saw how to filter good vs bad charts in the live market, and now you know how to increase the quality of your trades and get a higher win rate. Tags 1 minute , 2 trades , 48 hours , trades , every minute , higher timeframe , trading , trading rush , trend strategy , trend trading , trend trading strategy. This is the trading strategy that got the highest win rate. If so, will the win rate increase or decrease since the profit target will also come closer?
To answer this question, I took another trades and the results were pretty amazing as you will see. A few months ago, I was in a short trade with a stop-loss above the pullback and a resistance area. The trade was taken near a resistance, the price had reversed from the resistance before indicating a selling pressure near the resistance area, and the stop-loss was above the reversal point. On paper, the trade had a very high probability of winning.
The price moved towards my stop-loss and the market closed. Now there is a big problem. If the price opens with a gap up, I will lose more than what I expected. You see, the whole point of using a pullback stop-loss is to decrease the probability of stop-loss getting hit. If the direction of price movement was reversed from a point before, it can happen again, and we can set the stop-loss after that reversal point.
After the market opened with a gap up, it triggered my stop-loss, but then immediately started to move towards the entry direction. It was reversing from the pullback reversal point. So I reentered pretty much instantly after I saw the selling pressure with a stop-loss above the pullback again, and this time the price moved in the entry direction and the profit target was hit. The loss was recovered and it was like the loss never happened.
Breaking the strategy rules is not a good idea, but blindly sticking to entry and exit rules is also not a good idea. You should have a strong market view and adjust your trading style with the market. When I took the trade, my market view was short because the price was at resistance. When the stop-loss was hit and the price started to reverse near the resistance, it simply confirmed the original market view, and the stop-loss only got triggered because of the gap open.
That is not something we want to do. Setting stop-loss after a reversal point is always a better idea on paper. I took trades with a stop-loss below the reversal point. Since we recently tested the MACD strategy times on Bitcoin, I ran the following tests on that same market structure. The win rate with the pullback stop-loss was 62 percent with a 1.
As of writing this, Bitcoin has made an upward move of around percent in the last 12 months and made a high of more than percent. If you would have simply used the buy and hold strategy, you would have tripled your initial capital.
But most of this upward move was not a straight line. There was choppiness, noise, sudden moves, and then some straight moves. If there are a lot of market participants, there will be market noise. So in theory, if you set a smaller stop-loss, the probability of market noise triggering your smaller stop-loss will be higher. After 30 trades, there was a 14 percent difference between the two.
At 50 trades there was a clear difference between the profit graphs of the pullback and smaller stop-loss. The profit graph of the pullback stop-loss was looking much better. And while testing, I saw similar patterns too. In fact, many trades that were lost with a pullback stop-loss were won with a smaller stop-loss because the profit target was now closer. In some winning trades, the price did make a good move in the entry direction without moving towards the stop-loss, but then there were also trades where the price slowed down after the entry signal.
The price still stayed above the pullback stop-loss, but the smaller stop-loss was triggered easily. But what if we use the highest win rate strategy to exit trades as well? MACD is a momentum indicator and shows the increasing and decreasing momentum. In the highest win rate trading strategy, we use this in the trend to open a trade when the momentum of the pullback slows down and the price begins to move in the opposite direction. After taking a long position at the long MACD crossover, you keep the initial stop-loss below the pullback and exit when the next crossover happens.