This Stupid Easy Trading Strategy Works Everyday (Simple And Proven)

Summary

This video introduces a simple, consistent trading strategy designed for all skill levels. The strategy involves drawing key market levels at 9:30 a.m., using fair value gaps for entry signals, and applying a 'double break rule' to avoid losing trades. With a proven track record of profitability, the strategy is shown to work across multiple markets like stocks, forex, and crypto. By following a step-by-step approach and maintaining consistency, viewers can learn to execute trades confidently with a risk-to-reward ratio of up to 3:1. The video also highlights how the strategy led to substantial profits with minimal drawdown.

Takeaways

• 😀 The trading strategy is incredibly simple, making it ideal for beginners.
• 📈 It can be applied to multiple markets, including futures, stocks, forex, options, and crypto.
• ⏰ The strategy works best when you start trading right at 9:30 a.m. New York time.
• 🖋️ Step 1 involves marking the high and low of the 9:30 a.m. 5-minute candle to define a range.
• ⚡ Step 2 requires switching to the 1-minute chart and waiting for a break of the defined range.
• 🔍 Step 3 introduces a specific behavior to confirm whether the trade will be a winning one.
• 💡 The 'Fair Value Gap' is a key pattern used to spot potential trade entries, based on a gap between candles.
• 📊 The target for winning trades is typically set to a fixed 2:1 risk-to-reward ratio.
• 🚀 The 'Double Break Rule' helps filter out losing trades by adding an extra confirmation step before entering a trade.
• 💪 Backtesting the strategy shows impressive results with $17,300 in profit and a maximum drawdown of $1,500 over a month of trading.
• 🎯 The strategy boasts a 66% win rate across 24 trades, showcasing its effectiveness over a decent sample size.

Q & A

What is the core idea behind this trading strategy?

The core idea is a simple and consistent trading strategy that uses the high and low of the 9:30 a.m. 5-minute candle to identify entry points, with a focus on using fair value gaps and the double break rule to avoid losing trades.

What are the three key steps required to apply this strategy?

1) Draw the high and low of the first 5-minute candle at 9:30 a.m. on the 5-minute chart. 2) Wait for an entry trigger on the 1-minute chart, based on a specific break of the range. 3) Confirm the trade using specific behavior, like waiting for a fair value gap to form.

How does the fair value gap help identify winning trades?

The fair value gap is created when there is a gap between candles, specifically an expansive middle candle. When a fair value gap forms outside the 9:30 a.m. range, it signals an entry in the same direction as the gap, increasing the likelihood of a successful trade.

What is the significance of the double break rule?

The double break rule helps to increase the win rate by avoiding losing trades. It requires waiting for additional confirmation after the fair value gap forms, specifically waiting for a candle to close outside the range before entering the trade.

What role does the 2:1 risk-to-reward ratio play in this strategy?

The 2:1 risk-to-reward ratio ensures that, if the trade is successful, the trader profits twice as much as they lose when wrong. This allows for consistent profitability over time, even if the win rate isn't extremely high.

How does the double break rule modify the trade setup?

With the double break rule, instead of entering immediately after the fair value gap forms, you wait for a second layer of confirmation. This involves waiting for the market to trade back into the gap, followed by a candle closing outside the range in the same direction.

Why is the double break rule particularly effective for avoiding losing trades?

The double break rule adds an extra layer of confirmation, ensuring that the trade setup is more reliable and reducing the chance of entering a losing trade. This improved entry condition helps filter out false signals.

What impact does the double break rule have on the risk-to-reward ratio?

With the double break rule, the risk-to-reward ratio is adjusted to 3:1, as the extra confirmation provides more confidence in the trade. This means the trader risks less money to potentially gain more, improving overall profitability.

How did this strategy perform during a one-month backtest?

The strategy generated a profit of $17,300 with a maximum drawdown of $1,500 over a month of trading one contract of NASDAQ. It had a 66% win rate across 24 trades, demonstrating consistent success.

How can a trader use this strategy with a prop firm account?

This strategy works well with prop firm accounts, especially with discounts like the code 'casper' for 80% off on prop firm challenges. It allows traders to use low capital to access larger trading opportunities while leveraging the strategy for consistency.