Here is another winning trade that was executed on the DAX 40 using the 15-minute chart. I have constructed this simple Breakout strategy over months and months of backtesting. The strategy is not perfect. Nor should any strategy be perfect. There is no such thing as the perfect holy grail trading strategy. However, it does yield profits when used correctly.
We saw the price create a tight trading range with support and resistance zones being tapped multiple times. Then, as the London market opened, we saw a large bearish breakout candle appear. This breakout candle broke through the trading range that was set up by the Asian market.
This breakout candle gave us an entry. The candle closed very close to its low and the moving average pierced the very top of the breakout candle. If the moving average had not touched the breakout candle’s beginning, I would not have entered the trade. The reason for this is simple; Backtesting.
Back testing, backtesting, backtesting. This is how we determine if a strategy will be profitable in the long run. I figured out that when I use this breakout strategy, I like to see the breakout candle touch the moving average. This is just one of the rules that I need to see for me to warrant taking an entry.
I entered using a market order as the breakout candle closed. I then placed my Stop loss a few pips above the top of the breakout candle and my target was a RR of 1 to 1.7
This is simply just how I like to trade using this method. There are countless ways to find a target and I would encourage everyone to find a way that works for them. Traders would generally look left to find areas of interest in the price. They would look at structures, support and resistance zones, order blocks, supply and demand areas, patterns, FIB retracements, etc. The list is endless. There is no right or wrong way to find your targets. You simply need to find what works for you.
As we can see, the price quickly approached the target and even went lower. I did not hold on for a higher reward. I always exit my position once my pre-determined target has been reached. Some traders will trail their stop loss, locking in further profits. There is nothing wrong with that either. Backtest and figure out what works for you.
Today’s position was a textbook example of a perfect entry and a perfect trade. They do not always look so perfect, however, when they do appear, they are wonderful to trade. I hope you find value in this information and as always, please remember that this information is purely for educational purposes. I hope you all have a great day further.
The Vortex Trader
Prediction Analysis Overview Table
|Analysis Overview Information||Prediction Analysis information|
|On what market is this position based (Forex, Stocks, Crypto, Indices, or Commodities)?||Forex|
|What is the trading position identifier (Name and/or Symbol)?||DAX 40|
|Is this a Short or Long Position?||Short|
|Would this be considered a Short Term, Medium Term, or Long Term trade?||Short Term|
|As a Short, Medium, or Long Term trade, which best describes the position (Scalping, Day Trading, Swing Trading, or Position Trading)?||Scalping|
|What Time Frame chart is the position based on (1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, Daily, or Weekly chart)?||15-Minute|
|Depending on the asset, how much do you expect it to move in price or percentage?||From Entry to Target –0.34%|
|What ratio of risk to reward is this trade/position? Choose your appropriate target(s)||Approximately 2 to 1 Target 2 N/A Target 3 N/A|
|What were the technical analysis tools used? Tick the appropriate boxes;||☒ Chart Patterns ☐ Indicators ☒ Price Action ☒ Support & Resistance ☐ Trendlines|
|From the technical analysis tools and indicators provided, tick the appropriate boxes for the tools and indicators used to analyze the position;||☐ Ascending Triangle, ☐ Bollinger Bands, ☒ Candlesticks, ☐ Channel, ☐ Cup & Handle, ☐ Descending Triangle, ☐ Double Bottom, ☐ Double Top, ☐ EMA, ☐ Fibonacci Retracement, ☐ Flag, ☐ Head & Shoulders, ☐ MA, ☐ MACD, ☐ Order Blocks, ☐ Pennant, ☐ Rounding Top Or Bottom, ☐ RSI, ☐ Symmetrical Triangle, ☐ Volume, ☐ Wedge|
Disclaimer: The FSP probability score is derived from adding and subtracting the positive and negative aspects of the position and is not a definitive sign of how the trade will play out. FSP is not in any way a financial advisor