Boot Camp Day 48 Pt. 2 (with audio): Live Daily Bias Analysis on PPI

Summary

In this bootcamp video, the host discusses live backtesting as a key strategy for identifying potential trades. After facing technical issues with the first video, the host provides a simplified walkthrough of the process, including setting daily biases for different currency pairs and analyzing them through mock trades. Using examples like S&P, GBP/JPY, Gold, and GBP/USD, the host demonstrates how to use building blocks such as order blocks, liquidity zones, and equilibrium points to make educated trade predictions. The video wraps up with a preview of the next day's content, which will involve live testing and backtesting real trades.

Takeaways

• 😀 Takeaway 1: The initial video had no audio, which was disappointing, as it contained valuable content on backtesting and live trading.
• 😀 Takeaway 2: The video demonstrated live backtesting by marking daily biases, predicting price movement, and setting up mock trades.
• 😀 Takeaway 3: A significant reason for not trading on the day was the scheduled core PPI, unemployment claims, and FOMC member speeches.
• 😀 Takeaway 4: Marking out building blocks, such as liquidity and order blocks, helped predict how price would react in certain scenarios.
• 😀 Takeaway 5: The speaker discussed the importance of waiting for confirmation, such as a break of structure or a retrace, before executing a trade.
• 😀 Takeaway 6: For mock trades, targets were set based on candle highs and bodies from higher time frames, allowing for clear risk-reward analysis.
• 😀 Takeaway 7: The daily bias should be prioritized when trading intraday, especially when higher timeframes (weekly, daily, or four-hour) align in the same direction.
• 😀 Takeaway 8: For GBP/JPY, despite the bullish weekly bias, the bearish daily trend made it difficult to determine a clear bias for trading.
• 😀 Takeaway 9: Gold's conflicting biases between the daily bullish trend and the weekly bearish trend caused hesitation to trade, favoring a wait-and-see approach.
• 😀 Takeaway 10: Confidence in live trading can be built by performing live backtesting, documenting predictions, and reviewing them to identify areas of improvement.

Q & A

What is live backtesting in trading?

Live backtesting is a process where you simulate potential trades using past market data to assess how price would have reacted in certain conditions. It helps you develop a daily bias for each pair and gain insights into how to set up mock trades.

Why is daily bias important in forex trading?

Daily bias is crucial because it helps traders determine the general direction of price movement. By establishing whether the market is bullish or bearish, traders can focus on trades that align with the overall trend, improving the likelihood of success.

How do you determine your daily bias?

To determine your daily bias, analyze the higher timeframes (weekly, daily) and identify the trend. For example, if the weekly and daily charts are bullish, your bias is bullish. This sets the foundation for making trading decisions.

What is a break of structure (BOS) in trading?

A break of structure (BOS) occurs when price breaks through significant levels, such as support or resistance, indicating a shift in market sentiment. This helps traders identify potential entry points for trades.

Why is it important to align higher and lower timeframes in trading?

Aligning higher and lower timeframes is crucial because it ensures that your trade is in sync with the larger market trend. For example, if the daily and weekly biases are bullish, executing trades on lower timeframes like 1-hour or 15-minutes increases the chances of success.

What should you do when multiple timeframes have conflicting biases?

When multiple timeframes show conflicting biases, it's generally best to wait for a clearer market direction. For example, if the weekly bias is bullish but the daily is bearish, wait for a break in the daily trend to confirm the higher timeframe bias before entering a trade.

What does it mean when a market is in a retrace phase?

A retrace phase occurs when the market temporarily moves against the prevailing trend before continuing in the original direction. This is common in pullbacks, where price corrects itself before resuming the larger trend.

How does marking key levels help in trading?

Marking key levels such as order blocks, equilibrium points, and liquidity zones allows traders to predict where price might move. These areas are often where price reacts strongly, making them ideal for setting up trades.

What is the role of mock trades in building trading confidence?

Mock trades allow traders to practice analyzing the market, marking key levels, and setting trades without real risk. By evaluating the outcomes, traders can learn from their mistakes and gain confidence in executing live trades.

What are some common mistakes traders make when aligning daily bias with timeframes?

Common mistakes include ignoring conflicts between timeframes, failing to wait for confirmation before executing trades, and taking trades during market uncertainty. It's important to be patient and ensure that all timeframes align before entering a trade.