Back-Testing Jam Session - Forex Trading Strategy

Back-Testing Jam Session -  Forex Trading Strategy

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Today. We are going to continue, with, our a, previous, test that we were doing we were looking. At our pound. US dollar daily, chart. And we were going candle by candle so we're gonna go take a look at that once, again so we'll continue where. We left off, last, time, so we'll go one screen at a time and we. Will all. Play this game we'll see how many we can get. Correct, in a rope. So we'll, play the game again at this, point what. We're really trying to do is get some practice, in I was. Looking. At these. One. Of these performance. Hacking, so I've been I've, been thinking a lot about performance and, how to improve performance, so. I've been studying, different. Athletes, I, mean studying, different people. Who are at really, who. Are high performers, in different, areas, of, their, expertise, so, kind of stepping away from just. The trading, world because, I find a lot of the stuff when. It comes to trading is the same by this strategy this. Is the holy grail you, can do this do that so I'm not too interested in that what I'm trying to do is step away from, from. The trading, world and look at other areas, so, I said a new goal for myself that I want. To be one of the best in the world and in order to be best in the world he have to do. What, other people are not doing so you have to go, beyond, what, is considered. Acceptable. In, the field so you have to kind of push your limits so in order to do that I've been studying. A lot a, lot of top performance. And one, of the things that I, was looking at the other day and in, one of the sessions, or, in one of the videos that I, looked at and I actually went. And got that book, that I'm reading. Currently. I'll. Get the name of it. Basically. What they said that a lot of times what. We do is, any. Of the top performance, they spend 90, of their time practicing. And they only spent 10 percent of their time actually. Doing, the activities, so for example if we talk about, pro. Athletes for example let's, say NBA players they, actually, more. Time practicing, and, the. Number of games they actually play in the seasons compared to the number of hours that they spent. Practicing. Or I should say a number of hours, on the field in the game versus. Number of hours. That are spent practicing, whether that's practicing, on the court or lifting. Weights and, things like that so there, is a disproportionate. Amount. Of time spent, practicing. Versus. The amount of time spent performing, whereas. With us as traders we do the opposite of that we spend countless hours in, front of our screens and trying. To get into trades or managing, trades are just kind of staring at charts and I. Think we're doing it wrong or we're doing the other, way around so we need to focus. More on the practice, aspect, as well so this is a. Practice. That I am instilling, into, my life and making. Sure that we spend enough time practicing. And hence, our back-testing jam sessions so we are in no hurry to get, anywhere, what, we're trying to do is develop, muscle, memory so. So. Thank you for joining me in this session so we'll do this together, and, as we, do. This as we practice. And at. First I thought we, would just track, all the stats and stuff like that so we'll track, the stats for the full retesting, but for now we'll, just make a fun game out of it we'll just guess we'll just get all we're gonna do is this, is a guessing game so imagine, you, are, playing. Baseball and all are you're not playing this well we're just in the baseball cage. And all, we're gonna do is we're gonna swing the back and try, to hit the ball that's that's, the only aim, so we're gonna we're now going to count how many we hit or not the, goal is to, hit as many as possible, so that's our goal here we're gonna try to hit as many bullet, balls as possible, we're gonna swing the bat and just connect with the ball and and.

Try To hit the ball that's our only gaming only, goal here and and. We'll continue this. Well. We'll keep on going on, with this one because like I said we need to spend more time practicing, rather, than just performing, so, that's the goal here we, will get into stats so starting next week we'll be doing over testing as well and there, will be plenty of stats, on that so right now we're just developing muscle, memory we want to find out what happens, when we, actually. When. We are looking at this candle, so daily, candles. Is. What we're looking at so this is a pound dollar daily chart I'm using Forex tester to just back test this, one so we're gonna go one day at a time so each candle, is one day we're, not going to speed through it again, another. Thing that I was learning, about top. Performance, is that the. Malcom Gladwell the 10,000, hours of time, and you, may know if you have you follow me on youtube I do a YouTube show called 10,000, trades and the idea is to go through 10,000. Trades to develop. That muscle memory so, it's not just doing. 10,000. Repetitions. Of something that makes it successful is doing, the deliberate, practice, so, even when doing that we are doing the 10,000 trades where we have to be deliberate, in what. We're doing the same thing this is what we're gonna do that's why we won't actually speed, through it we're gonna do it one candle. At a time and the idea is that we think about it we analyze, it and we. Respond, to it ok, so let's get started. Here we, are looking. At our, a Forex tester, here this is what I'm gonna do and if. You have any questions, please feel free to. To. Let me know and we'll go through it so ok so this is where we had left, it off this, is a. Pound, dollar now we had, gone all the way so our move, had gone down, now we have gone all the way we are into our previous, support, resistance area, twice, the price and had. Or we had a double top here multiple, times price have reacted, to the support resistance area and now we are back there and we. Had this, bearish, candle close so, based on this bearish counter close is not quite an engulfing candle, closed which means it can push up and, then drop so my bias now will be to the downside because we are back, up here however there, is some, room, to the top here and the, candle isn't bearish, engulfing so. Which means it could go higher, so overall biases, to the downside but, expecting. A little, push to the upside as, well which is possible. So, let's see, so.

We'll Start our test. Oops. Okay. So that kind of went a little too far. Okay, so this is where we were so it had dropped and then it continued, on so it looks like we broke our previous. Resistance. Level, it dropped. Based. On what we were thinking about and then now it has pushed forward so we'll just we, won't go backwards, because we've already seen these candles, so let's just start from here I didn't. Push pause in, quick. Enough after, I started. The test so, hence the. Candles have gone further so, let's take a look now okay, so this is where we our price, went, and did a double top we had a, drop, here we are back into this support, resistance area, so this level that was our support. Our sorry resistance, level is now, acting, as support so. Here, if the price stays above, here, we are likely to see the price move up so let's let's. Go for it okay, so we are pushing into this support, here you're seeing pins on top in. This kind. Of scenario what. I would be looking for would. Be a break, below, this a, 1.55. 20 level and a hold below, that level so, this is a similar scenario that we got actually in pound dollar today price. Was. At support, level and then it tried to go through and then pushed back up so what we need to do is we need to see a sustained, move, below, so normally under live market conditions what I would be looking for here would, be a break to the downside below. This support. Level at 155. 20 and then, a backtest of this level and hold below so this is where the. Best entry, would be once price drops through pulls, back and then stays. Below so over here is where the best entry would be so, for now we, have to see how the price reacts, so this is a can that I would not be trading but, I am looking for reaction. At this level. Okay. So here, we are so this is what I was talking about a lot of times price will try to break through and then push back up so this is kind of similar to what happened with a pound today as well we, this was before pre ECB, we had price drop. And then it had pulled back so now we, are making, this, lower, highs, and lower, lows so. The biases, to the downside price is pushing, into our support, level we just need a close below this level so, again. On this day I would be looking, at my lower timeframe I would be looking for a break, below here and I will I would be looking for price to hold below the lower, below. Our support, level and I. Would play this on a lower timeframe so I wouldn't be trading this on a daily chart but on a lower timeframe so let's see what happens here here, we are so that's a good counter closed below our support, level I like this kind of close so now we have, been making lower, highs lower. Lows and here. We have a solid, counter close below, our support. Level where price was, struggling. For multiple, days so, I like this one now it can back it, can test back, tests here and then draw but overall biases to the downside so I'm looking for price to drop let's see if it does that there, we go price drops that's a good solid candle, close here and let's take a look at where we are in terms of support and resistance we, are into, a little bit of a resistance or sari support over here so, let's sue. My bias field is to the downside I'm looking for price to drop. So let's see, pulls. Back so the bias is still to the downside, and it. Doesn't do that so this is where it. Turns, around so now we're back into that area we have a pin here, so, with this one and it could just be a pullback because, it's not quite strong.

Candles. They are smaller, candles, so. With this one the. Bias would still be to the downside but this is not a candle, that I would trade on a daily timeframe, so I would just pass on that and look for a different, chart to, trade from something that has a solid, candle close so, with this one we are still whole. It. Hasn't quite turned into an, uptrend, yet so this is not a continuation, of the uptrend yet we are still waiting to see what price is going to do, that's. Not a very good candle closed either so we will skip that on a daily. Now. Okay, so now price is closing, below our support. Line level, once again so, I would look for price to draw further so, let's see if it does that there. We go so that's a good solid counter, close breaks this previous, level nice. Kind of close so this is again a candle I would trade so I'm looking for price to drop again and pulls. Back still, looking for it to drop, we. Have a drop looking, for it to drop still and it's. Going sideways now, so it's it's not it's, not, completely. In. The it doesn't have a solid downtrend. So what could happen here is price could reverse, here, because, it's not pushing. Lower, so normally, if there if in, order to see a trending, move we, need to keep on going with this here prices just going sideways so. We, have a bullish, close I would be looking for price to go back into this previous, support resistance areas, let's see if we get that. Note. We have we're, holding below this. Now okay, so we have another kind of close so this one was all sideways, so it didn't really go. Anywhere so, for the last four, or five days here price traded, in this range went, to the high dropped. And now we are into the bottom now, I am looking for price to drop. However, we need to be able to break below our. Support. Our little range here, so, it's ranging. Right now. Okay. So there we are so it's ranging at the moment so I'm looking for it to drop so my bias is to the downside but we could get stuck here at 150, 320 level so let's take a look, so, this is what I was talking about it tried to break through now we have an indecision, candle, so that's not a best candle to trade again, this will be one of those days we look for another, another. Trading opportunity, on a different chart so one thing to remember though is when, we have a candle, like this see how price does, drop so. This is important, to remember here because when we are trading we could take advantage of, that special on a smaller, time frame this. Is a tradable, opportunity. Because we were looking for price to drop here, we are it it, does drop but then it pulls back so this one this. Daily counter close is not the one that I will be dropping so overall the bias still to the downside we see bearishness, in the candle but I don't like these two pins so, that's an indecision, or a spinning top candle. So we just wait. For price, to show us the hand and we. Go to a different chart that would have a better opportunity that, day so, let's see what we get here. We are back to the top we haven't quite broken. Out of this range, here, so, as you can see price goes into the bottom pushes up goes, into the top and then pulls back but we are pressuring, the, into. The top here so we need to essentially, see a closed either to. The high or above. The range or below. The range and it's just been range bound for the for, the moment now.

This. One does look like a Morningstar but again we need a close above. The range so what I would be looking for would be price to break above pull. Back and hold, above, this top. Of the range so, with. This one I would be cautious again, wanna, trade another chart so not this one but I am looking for an opportunity, for a breakout to the upside and. We. Haven't broken out so we still range-bound we were back into the middle of the range so I would look for a price to drop to the bottom of the range let's, see, here. We are drops, to the bottom and that it may go test the bottom of the range again and it, may try to break again. It. Didn't do that it went to the high of the range and now we have a pin bar so I'm looking for price to go lower again so we just arranged, found here so price drops a little bit but now this, is the first. Really. Good candle, we have had that has closed, above, this previous, range so, we sat in this range forever, and, now. We have broken to the outs to, the upside. Here so I would be looking for price to move higher from, here so, let's see here. We go so, so that's a nice back house price goal comes back into it and then we have a good solid camera close to the upside so again looking for another candle, to the upside here we. Get a pullback which, is normal, still looking for price to move up higher and. Here. We are it moves higher but, into the next area, of support, and resistance and we. Get a pin bar so here price goes and test the support or resistance level, so, so. Again this is a tradable, opportunity, as well so normally. When we get big, moves up like this we expect to pull back and we're, looking for next, move, to the upside so this would be a tradable opportunity, so, again we find, the market direction on our daily chart and then we trade the the, lower timeframe, chart here so this with this one here that looks bearish, to me in the sense that that's a big pin we are into support, so with this one this kind of thing what could happen is price could pull back here and then, draw further or it can just push into the resistance here so my, bias would be more. Of a drop, after a pullback, so let's see so. There we go this is what I was talking about price, again a push up higher and then, drop so now we have a nice bearish candle close by, still stays to the downside, so let's take a look. It, drops. A little bit but we have a bullish candle close here so now we're starting to trade in this little range here so we we went from this, range to the, range higher so overall, bias is still upwards, now, I'm looking for price to go test the high once again let's, see here. We go and we have another pin twice, prices, tested too high so now I'm looking for it to drop again so basically what we're trying to see is we're. Looking for price to break to the upside but, because, we have rejection, here I'm looking for it to drop so, essentially. We, are assessing, it day by day as we go so, one. Thing to remember about this is you, can apply the same concept, to four-hour candles, to an hourly, candle, it's, the same bar by bar analysis. But, generally, what happens is when you're looking at the daily candle, the move. Will be much larger than. What you would see on, on. A. Candle. That is more. Hourly. Or, or shorter. Timeframe so just that the the length of the move will be different. Okay. So we have a pin now looking, for it to drop let's see, we. Get another, pin so another test I, would, I was looking for a move like this price pushes up and then drops but, no this one it has pushed up higher and. Still. Looking for a price to drop but we do have bullishness, prices. Holding above this previous, level, but. Still has. But. We are injury resistant so let's take a look looking, for it to drop a little bit here now. It breaks through so it does not drop holes too high here, and now. We have a big bullish, counter close okay. So now, looking. For price to pull. Back a bit and go higher that's, bullish. So my bias, is bullish, let's take a look, pull. Back and looking for it to go further up. Now. We get a, doji. So that's not a good good, tradable. Candle. So it goes both ways it, does go up but then goes. Both ways right, so, this one I, would, skip this. Day and I will look for a different chart. So, let's see what it gives us another doji, surprise is really indecisive, it is holding, this previous, highs though but. Again indecisive. So we, need, to see a price push down here and then go, up higher so let's, see if you get that there. We go prices, pushed, both. Ways so we are still so basically, with this one we're going from range to, range to, range so this is not a good solid trend.

And. We. Wouldn't really be looking to trade the trend here this, is more of a trending, move this. Is just. Range bound this one where I was just range, keeps shifting, upward, so overall there's, still that bullish. Bias and, this. Is more for swing trading. Opportunity. Here because price is pushing, higher but. It. Just keeps arranging. A four day so you're sitting in this forever, so, for day trading not, the best one with. This one here we have a nice beer. Almost, like a big pin bar here now, looking. For price to either come. Into this level, here which is our resistance. Now, turning support, previous, resistance turning, support and then, test this level and then go up higher or break, through and come back into this range and then trail to the downside so, with this one we have to wait and see we need to either, a close above, to go further, or we. Need a close below the trend line to, go further, down so, let's take a look okay. So now that is good this is what I was talking about how price will come I was looking for price to test, this level and then. Close. Either below or above so this is so, this is what happens in a real life so this is why we do this exercise because you keep seeing this over and this stuff over and over again and more. We. Practice, it the, better we become at seeing, the stuff okay, so now we are pushing into the highs we. Have tested. The trendline. Here tested. Our previous, support. Resistance. Level turning support, and now looking, for price to go higher see. If it does that. Sideways. Again not, really going anywhere so that there's this this resistance, it keeps getting, stuck here so we need to see a close above, this for it to go higher. There. We go so. As I was saying overall move is still to the upside, here so we are closing, we're, finally closed about the Pens are looking for it to come go test this level higher here and, it's. Sideways. Pulling, back into our previous, resistance, level, and here. We go test the high here so, this, is now we are back into this previous, support or resistance we, see big rejection. Here now, we, could see a drop, but then before, it drops we could see the price go all, the way here, are even. Slightly higher, to test this previous, resistance level, before it drops but, looking for price to drop after, this big, pin. So. Pushes higher it drops a little bit pushes higher and now we have a close right into the highs here kind of like this so this one. A good tradable, opportunity, because even though it is a good strong bullish candle, close we, are right into resistance so, again if, it. Could do one of these and then turn around so. We don't know at this point so we have to again go find, a different opportunity to.

Trade Than, this one or we could trade it on a smaller time frame like an hourly chart or something we're looking for price to show us its hand so, either it will break through pull, back and hold above or breakout. To the upside or it's, gonna turn around and close below, so on a one-hour charge our. Small, timeframe chart will be able to see this rejection, here, so let's see which one it gives us so. This is what I was talking about a lot of times we can get this so this is why even, though that was a good strong, candle, close we, were right into resistance, so now this candle here looks just like this one and, so. We have a bearish candle, we, have railroad, tracks essentially, here so looking for price to drop let's, see, there. We go again we have a good counter close we are into support here now though so. Looking for a price to drop further but, I would be mindful of this support, so this still a tradable, opportunity. There's 50 pips here and so. I would, so. I would I could still we could still trade this let's take a look looking for it to drop, and. It not so, we are still holding above, this, support. Level here, so this is the day we would be totally wrong now, we are pushing higher that's a bullish engulfing candle. Close so, again looking for a retest, of the high and this time we could go even higher all the way up there so there's room but, we would have to be careful with that. This little zone, of resistance, that we have here so, bias. Is still to the upside, here. We go. Now, we are, again testing, this a previous, level we pushed up and then closed below so, this is there's, more the sellers, sitting, here so overall, bias is still to the upside, with, this one again I would be careful I am looking for price to move higher but, we could get a reversal. Here as well because of this big pen which is not good so let's take a look so, here, looks, just, like this candle, so it's a lot of repetitive, stuff, as we can see this candle looks like this candle so what happened after this candle we got one of these so, let's see what we get after this one so basically what this means is that we are into resistance and. There. Is there. Are problems, there could be potential, problems, here so, let's take a look. Here. We are so now we have a doji, here little pin bar type thing gravestone, doji so.

With This one that's twice price has rejected so, like I was saying this bullishness, in this candle but there's also seller, sitting, there so we got that that's why we got that push lower, here, so, now looking, for price to drop but again it can go test, all the way up here so we have to be careful but I'm looking for price to drop. Here. We go that's our drop, now, looking. For price too so we're still, the. Lows are still higher just, looking, for price to drop further here, that's. Our, drop here we go. Now. A big drop so ever look for a pullback, into potentially, into this support resistance level. Here but, the bias now is solidly, to the downside, so let's take a look bias my biases, to the downside here so. We got a pullback I was looking for a pullback into this level but it pulled all the way back here into the pins so. So. Now the bias, is still to the downside because we don't have bullish, engulfing counter, close so, let's take a look so. There we go. The, bias still remains to the downside, here. We are and now the candles, are getting smaller, so. Bias is still to the downside but I would be cautious we are coming in to the bottom here where price responded. From so, let's see so, biases, to the downside, here. We are surprised, is having trouble, with this level now. Okay, so we are rejecting, this area, here as well that I was looking, for price to react at now, this is not the best, tradable. Opportunity, here again this would be another, one where, we look for something else. Now. We have a solid candle close above so looking for price to move up higher. And it. Pulls back still. So. We have a rejection, here surprise is just going sideways so what we're seeing here is price just tends. To it's. Going into these. Ranges. So we, went, up now we are in sideways, range here so it could drop here so this is a little bit of a mess not. The best one to trade but let's see what we get okay. Price holds. Higher so this is a good sign so now we're looking for price to go higher. Back, into these highs, there. We are so, see how it does a back test of this level so that's what I was referring, to back here we can usually get when. We have large candles, price, can usually pull, back and then, push, higher so same thing here price pulls. Down and then goes up higher so we don't want to take a trade at that high here at the top we want to wait for a pullback and then enter the trade so now I'm still looking for price to go test the highs here, let's. See. So. Here we are back into the highs, now. With this candle closed we have pins on both sides that would not, that. Makes it a little. Okay. So we, are into resistance I would be careful with this one it's, not a great idea to buy into resistance, so let's see so this would be another one of those days, where we find look for another chart to trade so, let's see this, is why so, now, we have, prices, just going sideways we have dropped.

Here But it hasn't really we don't have a good solid candle, close for example, this candle, here was a solid, bearish candle, this, one here has pins on the bottom pin on the top pins, on both sides and not the best one to trade so, let's. Take a look and. Now. We go, higher. All. Right so I, think we, will close. Off here. Guys, have a wonderful weekend, and I'll see, you on Monday bye, for now.

2018-04-28 20:51

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The book you're referring to is by chance, The Art of Learning by Josh Witzkin?

Back testing is key, great video!

Good book

Hello Pretty lady, I watched almost many of your videos here and this back testing concept is really amazing .Please increase video quality to upto 720 at-least... Nice explanation as usual.

Trading with Venus anytime

Thanks Corey!


Yes, that's the book Julian! Another good book on this topic is by Daniel Coyle, called The Talent Code.

My apologies about the video quality. I am working on it!

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