My New Strategy │ Road to Profitability Pt.27

Summary

In this video, the creator discusses their updated trading strategy, focusing on PM session and backtesting for improved profitability. They explain how they've shifted from larger targets to aiming for smaller, more consistent wins, around 40-50 handles. With a focus on liquidity and identifying key market conditions, the creator shares insights on identifying entry points, managing risk with smaller contracts, and adjusting their strategy based on market manipulation and economic news. Overall, they emphasize the importance of backtesting and consistency in trading success, while also providing a sneak peek into upcoming content on their journey.

Takeaways

• 😀 The user has been focusing on refining their trading strategy, especially adjusting entry timing and trade targets.
• 😀 The market condition has changed with higher resistance, making large moves more difficult to target consistently.
• 😀 The user has shifted their focus to trading smaller contract sizes (2 micros) and targeting smaller, more achievable profits (40-50 handles).
• 😀 The user has been backtesting extensively, adjusting their strategy to ensure consistency and focusing on PM session trading over AM sessions.
• 😀 The user has been testing different strategies for entry, exit, and target points, including using the first presented fair value gap after 1:30 PM as an entry point.
• 😀 The strategy includes identifying liquidity gaps, jagged versus smooth price moves, and taking advantage of institutional order flow.
• 😀 The user highlights the importance of backtesting, using past data to determine trade patterns and refine strategy.
• 😀 The user acknowledges that not all trades will be successful but emphasizes learning from losses and adjusting to market conditions.
• 😀 Mock sessions (3:45 PM onwards) are considered important for quick spooling in a specific direction, based on previous liquidity draws and price action.
• 😀 The focus on low-risk, high-probability trades with smaller targets and contract sizes helps maintain profitability while reducing exposure to market volatility.
• 😀 The user plans to continue sharing their progress and strategy updates, encouraging others to study and backtest their own approaches to trading.

Q & A

What is the primary focus of the trader in this new approach to trading?

The trader is shifting towards focusing on smaller, more achievable profit targets rather than large, high-risk trades. They aim for consistent, low-risk gains by focusing on small contract sizes and fair value gaps, especially during the PM session.

Why does the trader prefer trading during the PM session?

The trader finds that the PM session offers a smoother market with less chaotic price action compared to the AM session, which is more prone to volatile movements. This allows for better clarity and more reliable setups.

What role does backtesting play in the trader’s strategy?

Backtesting is critical to the trader’s approach. The trader has tested their strategy for weeks and confirmed its reliability, which helps build confidence and refine their method. The backtesting results suggest the approach works consistently, though occasional losses are still part of the process.

How does the trader manage risk in this strategy?

The trader minimizes risk by using smaller contract sizes. This allows for lower exposure and reduces the impact of potential losses. The goal is to capture smaller, more frequent wins, rather than aiming for large, unpredictable profits.

What tools or concepts does the trader use to identify trade setups?

The trader relies on fair value gaps, institutional order flow, and liquidity analysis to identify potential trade setups. These tools help them understand the market structure and where the best opportunities are likely to occur.

What is the significance of liquidity in the trader’s analysis?

Liquidity plays a key role in the trader’s strategy, as it helps identify where large orders might be placed and where price movements are likely to be smoother. The trader focuses on understanding liquidity imbalances to anticipate market moves more accurately.

Why is the trader moving away from larger moves (40-50 handles)?

The trader found that aiming for large price moves was often unpredictable and more prone to risk. By focusing on smaller, more manageable moves, they can increase their win rate and reduce exposure to volatile price action.

What does the trader mean by 'mock' trades and how do they factor into their strategy?

'Mock' trades likely refer to simulated or test trades. The trader mentions that even when a loss occurs in one session (PM), they can often still win in the following mock or backtested trades, highlighting the overall reliability of their strategy over time.

What does the trader hope to show viewers in upcoming trading weeks?

The trader is excited to put their backtested strategy into action and share the results with viewers over the upcoming week. They aim to showcase how the new approach performs in real-time, offering a transparent view of their trading process.

What is the trader’s attitude towards potential losses?

The trader acknowledges that losses are a part of trading but emphasizes that with their current strategy, losses are manageable. The key is focusing on smaller, more consistent trades to ensure overall profitability in the long run.