Friday, February 7, 2014

Week in Review: 3rd February 2014 to 9th February 2014

Saw some action this week. Five trades were triggered. I won four and lost one, capping my third consecutive profitable week. Example of one of the winning trades is below.

AUDCAD - Daily Chart

This was based on my Hermes low volatility system. Spotted low volatility the day before the RBA's interest rate decision. On the actual day, the RBA announced that it was no longer cutting interest rates for the foreseeable future. The RBA's announcement proved bullish for the AUDCAD and I went long on the break of the previous day's high.

I could've handled the bullish rise much better if I used a bit of discretion here. The upward move was based on fundamentals, not purely technicals, so all types of traders were buying the AUD. In any market, you will have different types of traders with their own philosophies, methodologies, outlook etc. If you can find a situation where an extreme diversity of traders suddenly find themselves agreeing with each other and taking the same side of the market, you'll find large movements like the one shown above. It's a good low-risk, high-reward situation. I should keep better track of news releases and see if a move is driven by technicals or fundamentals (or both). If the move is mainly driven by fundamentals, then the move will more likely be bigger in scope.

System Development

Not much to report on here. I'm still testing pinbars during the Asian session. Large, prominent pinbars seem to be doing okay, but the problem is the lack of signals. Over a five month period, there were only 41 pinbars with a size greater than 1.5 ATR(12). And this is on the 5 minute chart. If trading manually, you may have to stare at a chart for perhaps 20 hours before you see a signal. That's not a lifestyle I want. Still doing more testing, though. 


  1. Hi I’m following you since long time and I really appreciate your great job in testing, studying and searching new trading solutions. I see that you have from your links the course of Nial Fuller, I bought it and basically I think there is some good (basic) stuff there.
    I’m wondering if you ever test it (pin, fakey and inside bars at resistance levels with the trend).
    I know that some subjectivity is in but I really appreciate your feedback about the this trading strategy. It definitely works or not?

    Thank you in advance.

    1. Hi Al. I've tested most of those setups but haven't found any mechanical rules that work, with the exception of the weekly timeframe. With the weekly timeframe, I found pinbars and dojis to work with small reward:risk ratios. I haven't tested inside bars, but have found that bars / candles that are 50% or less in size than the preceding candle also work with small reward:risk ratios. I haven't had much success on the daily timeframe or below, at least with mechanical rules.


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