Back-Testing Jam Session – Forex Trading Strategy

today we are going to continue with oura previous test that we were doing we were looking at our pound US dollardaily chart and we were going candle by candle so we're gonna go take a look atthat once again so we'll continue where we left off last timeso we'll go one screen at a time and we will all play this game we'll see howmany we can get correct in a rope so we'll play the game again at this pointwhat we're really trying to do is get some practice in I was looking at theseone of these performance hacking so I've been I've been thinking a lot aboutperformance and how to improve performance so I've been studyingdifferent athletes I mean studying different people who are at really whoare high performers in different areas of their expertise so kind of steppingaway from just the trading world because I find a lot of the stuff when it comesto trading is the same by this strategy this is the holy grail you can do thisdo that so I'm not too interested in that what I'm trying to do is step awayfrom from the trading world and look at other areas so I said a new goal formyself that I want to be one of the best in the world and in order to be best inthe world he have to do what other people are not doing so you have to gobeyond what is considered acceptable in the field so you have to kind of pushyour limits so in order to do that I've been studying a lot a lot of topperformance and one of the things that I was looking at the other day and in oneof the sessions or in one of the videos that I looked at and I actually went andgot that book that I'm reading currently I'll get the name of it basically whatthey said that a lot of times what we do is any of the top performance they spend90 of their time practicing and they onlyspent 10 percent of their time actually doing the activities so for example ifwe talk about pro athletes for example let's say NBA players they actually moretime practicing and the number of games they actually play in the seasonscompared to the number of hours that they spent practicing or I should say anumber of hours on the field in the game versus number of hours that are spentpracticing whether that's practicing on the court or lifting weights and thingslike that so there is a disproportionate amount of time spent practicing versusthe amount of time spent performing whereas with us as traders we do theopposite of that we spend countless hours in front of our screens and tryingto get into trades or managing trades are just kind of staring at charts and Ithink we're doing it wrong or we're doing the other way around so we need tofocus more on the practice aspect as well so this is a practice that I aminstilling into my life and making sure that we spend enough time practicing andhence our back-testing jam sessions so we are in no hurry to get anywhere whatwe're trying to do is develop muscle memory so so thank you for joining me inthis session so we'll do this together and as we do this as we practice and atfirst I thought we would just track all the stats and stuff like that so we'lltrack the stats for the full retesting but for now we'll just make a fun gameout of it we'll just guess we'll just get all we're gonna do is this is aguessing game so imagine you are playing baseball and all are you're not playingthis well we're just in the baseball cage and all we're gonna do is we'regonna swing the back and try to hit the ball that's that's the only aim so we'regonna we're now going to count how many we hit or not the goal is to hit as manyas possible so that's our goal here we're gonna try to hit as many bulletballs as possible we're gonna swing the bat and just connect with the ball andand try to hit the ball that's our only gaming only goal here and and we'llcontinue this well we'll keep on going on with thisone because like I said we need to spend more time practicing rather than justperforming so that's the goal here we will get into stats so starting nextweek we'll be doing over testing as well and there will be plenty of stats onthat so right now we're just developing muscle memory we want to find out whathappens when we actually when we are looking at this candle so daily candlesis what we're looking at so this is a pound dollar daily chart I'm using Forextester to just back test this one so we're gonna go one day at a time so eachcandle is one day we're not going to speed through it again another thingthat I was learning about top performance is that the Malcom Gladwellthe 10,000 hours of time and you may know if you have you follow me onyoutube I do a YouTube show called 10,000 trades and the idea is to gothrough 10,000 trades to develop that muscle memory so it's not just doing10,000 repetitions of something that makes it successful is doing thedeliberate practice so even when doing that we are doing the 10,000 tradeswhere we have to be deliberate in what we're doing the same thing this is whatwe're gonna do that's why we won't actually speed through it we're gonna doit one candle at a time and the idea is that we think about it we analyze it andwe respond to it ok so let's get started here we are looking at our a Forextester here this is what I'm gonna do and if you have any questions pleasefeel free to to let me know and we'll go through it so ok so this is where we hadleft it off this is a pound dollar now we had gone all the way so our move hadgone down now we have gone all the way we are into our previous supportresistance area twice the price and had or we had a double top here multipletimes price have reacted to the support resistance area and now we are backthere and we had this bearish candle close so based on this bearish counterclose is not quite an engulfing candle closed which means it can push up andthen drop so my bias now will be to the downside because we are back up herehowever there is some room to the top here and the candle isn't bearishengulfing so which means it could go higherso overall biases to the downside but expecting a little push to the upside aswell which is possible so let's see so we'll start our testoops okay so that kind of went a little too far okay so this is where we were soit had dropped and then it continued on so it looks like we broke our previousresistance level it dropped based on what we were thinking about and then nowit has pushed forward so we'll just we won't go backwards because we've alreadyseen these candles so let's just start from here I didn't push pause in quickenough after I started the test so hence the candles have gone further so let'stake a look now okay so this is where we our price went and did a double top wehad a drop here we are back into this support resistance area so this levelthat was our support our sorry resistance level is now acting assupport so here if the price stays above here we are likely to see the price moveup so let's let's go for it okay so we are pushing into this supporthere you're seeing pins on top in this kind of scenario what I would be lookingfor would be a break below this a 1.

55 20 level and a hold below that level sothis is a similar scenario that we got actually in pound dollar today price wasat support level and then it tried to go through and then pushed back up so whatwe need to do is we need to see a sustained move below so normally underlive market conditions what I would be looking for here would be a break to thedownside below this support level at 155 20 and then a backtest of this level andhold below so this is where the best entry would be once price drops throughpulls back and then stays below so over here is where the best entry would be sofor now we have to see how the price reacts so this is a canthat I would not be trading but I am looking for reaction at this level okayso here we are so this is what I was talking about a lot of times price willtry to break through and then push back up so this is kind of similar to whathappened with a pound today as well we this was before pre ECB we had pricedrop and then it had pulled back so now we are making this lower highs and lowerlows so the biases to the downside price is pushing into our support level wejust need a close below this level so again on this day I would be looking atmy lower timeframe I would be looking for a break below here and I will Iwould be looking for price to hold below the lower below our support level and Iwould play this on a lower timeframe so I wouldn't be trading this on a dailychart but on a lower timeframe so let's see what happens here here we are sothat's a good counter closed below our support level I like this kind of closeso now we have been making lower highs lower lows and here we have a solidcounter close below our support level where price was struggling for multipledays so I like this one now it can back it can test back tests here and thendraw but overall biases to the downside so I'm looking for price to drop let'ssee if it does that there we go price drops that's a goodsolid candle close here and let's take a look at where we are in terms of supportand resistance we are into a little bit of a resistance or sari support overhere so let's sue my bias field is to the downside I'm looking for price todrop so let's see pulls back so the bias is still to the downside and it doesn'tdo that so this is where it turns around so now we're back into that area we havea pin here so with this one and it could just be a pullback because it's notquite strong candles they are smaller candles so with this one the bias wouldstill be to the downside but this is not a candle that I would trade on a dailytimeframe so I would just pass on that and look for a different chart to tradefrom something that has a solid candle close so with this one we are stillwhole it hasn't quite turned into an uptrendyet so this is not a continuation of the uptrend yet we are still waiting to seewhat price is going to do that's not a very good candle closed either so wewill skip that on a daily now okay so now price is closing below our supportline level once again so I would look for price to draw further so let's seeif it does that there we go so that's a good solid counter close breaks thisprevious level nice kind of close so this is again a candle I would trade soI'm looking for price to drop again and pulls back still looking for it to dropwe have a drop looking for it to drop still and it's going sideways now soit's it's not it's not completely in the it doesn't have a solid downtrend sowhat could happen here is price could reverse here because it's not pushinglower so normally if there if in order to see a trending move we need to keepon going with this here prices just going sideways so we have a bullishclose I would be looking for price to go back into this previous supportresistance areas let's see if we get that note we have we're holding belowthis now okay so we have another kind of close so this one was all sideways so itdidn't really go anywhere so for the last four or five days here price tradedin this range went to the high dropped and now we are into the bottom now I amlooking for price to drop however we need to be able to break below oursupport our little range here so it's ranging right now okay so there we areso it's ranging at the moment so I'm looking for it to drop so my bias is tothe downside but we could get stuck here at 150 320 level so let's take a look sothis is what I was talking about it tried to break through now we have anindecision candle so that's not a best candle to trade again this will be oneof those days we look for another another trading opportunity on adifferent chart so one thing to remember though is when we have a candle likethis see how price does drop so this is important to remember herebecause when we are trading we could take advantage of that special on asmaller time frame this is a tradable opportunity because we were looking forprice to drop here we are it it does drop but then it pulls back so this onethis daily counter close is not the one that I will be dropping so overall thebias still to the downside we see bearishness in the candle but I don'tlike these two pins so that's an indecision or a spinning top candle sowe just wait for price to show us the hand and we go to a different chart thatwould have a better opportunity that day so let's see what we get herewe are back to the top we haven't quite broken out of this range here so as youcan see price goes into the bottom pushes up goes into the top and thenpulls back but we are pressuring the into the top here so we need toessentially see a closed either to the high or above the range or below therange and it's just been range bound for the for the moment now this one doeslook like a Morningstar but again we need a close above the range so what Iwould be looking for would be price to break above pull back and hold abovethis top of the range so with this one I would be cautious again wanna tradeanother chart so not this one but I am looking for an opportunity for abreakout to the upside and we haven't broken out so we still range-bound wewere back into the middle of the range so I would look for a price to drop tothe bottom of the range let's see here we are drops to the bottom and that itmay go test the bottom of the range again and it may try to break again itdidn't do that it went to the high of the range and now we have a pin bar soI'm looking for price to go lower again so we just arranged found here so pricedrops a little bit but now this is the first really good candle we have hadthat has closed above this previous range so we sat in this range foreverand now we have broken to the outs to the upside here so I would be lookingfor price to move higher from here so let's see here we go so so that's a niceback house price goal comes back into it and then we have agood solid camera close to the upside so again looking for another candle to theupside here we get a pullback which is normal still looking for price to moveup higher and here we are it moves higher but into the next areaof support and resistance and we get a pin bar so here price goes and test thesupport or resistance level so so again this is a tradable opportunity as wellso normally when we get big moves up like this we expect to pull back andwe're looking for next move to the upside so this would be a tradableopportunity so again we find the market direction on our daily chart and then wetrade the the lower timeframe chart here so this with this one here that looksbearish to me in the sense that that's a big pin we are into support so with thisone this kind of thing what could happen is price could pull back here and thendraw further or it can just push into the resistance here so my bias would bemore of a drop after a pullback so let's see so there we go this is what I wastalking about price again a push up higher and then drop so now we have anice bearish candle close by still stays to the downside so let's take a look itdrops a little bit but we have a bullish candle close here so now we're startingto trade in this little range here so we we went from this range to the rangehigher so overall bias is still upwards now I'm looking for price to go test thehigh once again let's see here we go and we have another pin twice prices testedtoo high so now I'm looking for it to drop again so basically what we'retrying to see is we're looking for price to break to the upside but because wehave rejection here I'm looking for it to drop so essentially we are assessingit day by day as we go so one thing to remember about this is you can apply thesame concept to four-hour candles to an hourly candle it's the same bar by baranalysis but generally what happens is when you're looking at the daily candlethe move will be much larger than what you would see on on a candle that ismore hourly or or shorter timeframe so just that thethe length of the move will be different okay so we have a pin now looking for itto drop let's see we get another pin so another test I would I was looking for amove like this price pushes up and then drops but no this one it has pushed uphigher and still looking for a price to drop but we do have bullishness pricesholding above this previous level but still has but we are injury resistant solet's take a look looking for it to drop a little bit here now it breaks throughso it does not drop holes too high here and now we have a big bullish counterclose okay so now looking for price to pull back a bit and go higher that'sbullish so my bias is bullish let's take a lookpull back and looking for it to go further up now we get a doji so that'snot a good good tradable candle so it goes both ways it does go up but thengoes both ways right so this one I would skip this day and I will look for adifferent chart so let's see what it gives us another doji surprise is reallyindecisive it is holding this previous highs though but again indecisive so weneed to see a price push down here and then go up higher so let's see if youget that there we go prices pushed both ways so we are still so basically withthis one we're going from range to range to range so this is not a good solidtrend and we wouldn't really be looking to trade the trend here this is more ofa trending move this is just range bound this one where I was just range keepsshifting upward so overall there's still that bullish bias and this is more forswing trading opportunity here because price is pushing higher but it justkeeps arranging a four day so you're sitting in this forever so for daytrading not the best one with this one here we have a nice beeralmost like a big pin bar here now looking for price to either come intothis level here which is our resistance now turning support previous resistanceturning support and then test this level and then go up higher or break throughand come back into this range and then trail to the downside so with this onewe have to wait and see we need to either a close above to go further or weneed a close below the trend line to go further down so let's take a look okayso now that is good this is what I was talking about how price will come I waslooking for price to test this level and then close either below or above so thisis so this is what happens in a real life so this is why we do this exercisebecause you keep seeing this over and this stuff over and over again and morewe practice it the better we become at seeing the stuff okay so now we arepushing into the highs we have tested the trendline heretested our previous support resistance level turning support and now lookingfor price to go higher see if it does that sideways again not really goinganywhere so that there's this this resistance it keeps getting stuck hereso we need to see a close above this for it to go higher there we go so as I wassaying overall move is still to the upside here so we are closing we'refinally closed about the Pens are looking for it to come go test thislevel higher here and it's sideways pulling back into our previousresistance level and here we go test the high here so this is now we are backinto this previous support or resistance we see big rejection here now we couldsee a drop but then before it drops we could see the price go all the way hereare even slightly higher to test this previous resistance level before itdrops but looking for price to drop after this big pin so pushes higher itdrops a little bit pushes higher and now we have a close right into the highshere kind of like this so this one a good tradable opportunity because eventhough it is a good strong bullish candle close we are right intoresistance so again if it could do one of these and then turn around so wedon't know at this point so we have to again go find a different opportunity totrade than this one or we could trade it on a smaller time frame like an hourlychart or something we're looking for price to show us its hand so either itwill break through pull back and hold above or breakout to the upside or it'sgonna turn around and close below so on a one-hour charge our small timeframechart will be able to see this rejection here so let's see which one it gives usso this is what I was talking about a lot of times we can get this so this iswhy even though that was a good strong candle close we were right intoresistance so now this candle here looks just like this one and so we have abearish candle we have railroad tracks essentially here so looking for price todrop let's see there we go again we have a good counter close weare into support here now though so looking for a price to drop further butI would be mindful of this support so this still a tradable opportunitythere's 50 pips here and so I would so I would I could still we could still tradethis let's take a look looking for it to drop and it not so we are still holdingabove this support level here so this is the day we would be totally wrong now weare pushing higher that's a bullish engulfing candle close so again lookingfor a retest of the high and this time we could go even higher all the way upthere so there's room but we would have to be careful with that this little zoneof resistance that we have here so bias is still to the upside here we gonow we are again testing this a previous level we pushed up and then closed belowso this is there's more the sellers sitting here so overall bias is still tothe upside with this one again I would be careful I am looking for price tomove higher but we could get a reversal here as well because of this big penwhich is not good so let's take a look sohere looks just like this candle so it's a lot of repetitive stuff as we can seethis candle looks like this candle so what happened after this candle we gotone of these so let's see what we get after this one so basically what thismeans is that we are into resistance and there is there are problems there couldbe potential problems here so let's take a look here we are so now we have a dojihere little pin bar type thing gravestone doji so with this one that'stwice price has rejected so like I was saying this bullishness in this candlebut there's also seller sitting there so we got that that's why we got that pushlower here so now looking for price to drop but again it can go test all theway up here so we have to be careful but I'm looking for price to drop here we gothat's our drop now looking for price too so we're still the lows are stillhigher just looking for price to drop further here that's our drop here we gonow a big drop so ever look for a pullbackinto potentially into this support resistance level here but the bias nowis solidly to the downside so let's take a look bias my biases to the downsidehere so we got a pullback I was looking for a pullback into this level but itpulled all the way back here into the pins so so now the bias is still to thedownside because we don't have bullish engulfing counter close so let's take alook so there we go the bias still remains to the downsidehere we are and now the candles are getting smallerso bias is still to the downside but I would be cautious we are coming in tothe bottom here where price responded from so let's see so biases to thedownside here we are surprised is having trouble with this level now okay so weare rejecting this area here as well that I was looking for price to react atnow this is not the best tradable opportunity here again this would beanother one where we look for something else now we have a solid candle closeabove so looking for price to move up higherand it pulls back still so we have a rejection here surprise is just goingsideways so what we're seeing here is price just tends to it's going intothese ranges so we went up now we are in sideways range here so it could drophere so this is a little bit of a mess not the best one to trade but let's seewhat we get okay price holds higher so this is a goodsign so now we're looking for price to go higher back into these highs there weare so see how it does a back test of this level so that's what I wasreferring to back here we can usually get when we have large candles price canusually pull back and then push higher so same thing here price pulls down andthen goes up higher so we don't want to take a trade at that high here at thetop we want to wait for a pullback and then enter the trade so now I'm stilllooking for price to go test the highs here let's see so here we are back intothe highs now with this candle closed we have pinson both sides that would not that makes it a little okay so we are intoresistance I would be careful with this one it's not a great idea to buy intoresistance so let's see so this would be another one of those days where we findlook for another chart to trade so let's see this is why so now we have pricesjust going sideways we have dropped here but it hasn't really we don't have agood solid candle close for example this candle here was a solidbearish candle this one here has pins on the bottom pin on the top pins on bothsides and not the best one to trade so let's take a look and now we go higherall right so I think we will close off here guys have a wonderful weekend andI'll see you on Monday bye for now.

Source: Youtube

Back-Testing Jam Session - Forex Trading Strategy

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