hello I have just started watching this thread since a month, looks like a good system. I had one question that for example we took a long trade at the lowest h1 open following all the rules, if later on in the day it comes back to the same place again can we keep taking trades there if the lowest h1 open is still the same?
Highest Open / Lowest Open Trade
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i am testing this method from a while and still struggling with losses, 1 losing trade will wipeout 4 to 6 winning trades which is really frustrating, today i was trading eurusd, took some 4 pips on trade 1 and 2, trade 3 was - 17, it didn't give me even 1 pip, i dont know what was the mistake actually, but it ended up as a bad day, any advice would be much apreciated, thanks {image}
I hope this helps. While I was putting this together, I now see that you were aware you were trading above yesterday's high, so forgive me if I mention it again.
Let's take a look at the overall H1 chart to start.
As you are aware, the majority of the day was spent with price above yesterday's high, so trade with caution. Also, given the previous day's bullish close and this day's apparent desire to go even higher, the "Trade with Caution" alarm would have been a red flag for me.(Please don't take offence as none is intended
)As you can see, Candle A took out the previous Daily high and went on to print a new high.
Candle B opened and promptly took out that daily high. That is regarded as a BREAKOUT and NO valid trade entry can print UNTIL during the NEX hourly candle AS A MINIMUM.
WHY? Because your trade entries are only valid when an M5 (or M1,M15,M30 ) candle OPENS IN THE AREA OF INTEREST (between the Daily High and the Highest H1 Open).
WHEN Candle B opened and THEN broke the previous HIGH, the previous Area of Interest became invalid and no longer of interest.
So you need to WAIT until this current candle closes to then be able to validate the NEW Area of Interest and go from there.
As you can see, Candle B closed having made a new daily high. So the NEW area of interest will be between Candle B's High and the NEW Highest H1 Open, which was printed when Candle C opened.
BUT AGAIN, Candle C very quickly broke candle B's HIGH, and as with the previous explanation, there will be NO valid setup available in this hour.
Candle C went on to print a new daily high, so when candle D opened and printed a new Highest H1 open, then a NEW area of interest was created.
I will leave that H1 and look at the M5 which is where you placed your trades.
The first trade.....
As you can see, Candle A (the last candle of the hour) printed a NEW daily high. In doing so, a new area of interest (AOI) was identified.
When Candle B opened, it printed a New Highest H1 Open, and in turn, printed another New area of interest Between it's open price and the daily high. As you can see, it was an extremely narrow AOI and was quickly swallowed when candle B continued in a bullish fashion and took out the Daily high at that time.
As previously mentioned, that move invalidated the AOI, and no valid trade setup could be identified as per the rules.
These moves are referred to as "breakouts," and there should be NO trading once a breakout occurs.
Trade 2.....
As with the first trade, this trade was placed during the same hourly period and should not have been placed according to the rules as previously mentioned for trade 1.
Also, even IF a valid seyup HAD been on offer, your trade entry price should ALWAYS be the Highest H1 Open price, and this clearly wasn't.
BUT you got lucky with both trades and had a positive result, but again, not according to the method.
Trade 3.
According to the rules (EXCEPT for cautious trading above yesterday's high), there appears to be nothing else wrong with the entry.
Candle A printed a new H1 highest open and formed a new AOI.
Candle B opened in the AOI but wouldn't have triggered a trade from the H1 open price.
Candle C also opened in the AOI, and it appears that it would have triggered a trade.
Candle D (your entry candle).
Candle E then went on to take out the daily high at that time and in doing so, also unfortunately your stop.
Just one thing of note if I may.
At that time of the trading day, your last trade was placed with 45 minutes to go before New York close.
Brokers are notorious for increasing spreads at that time and also at the start of the new trading day. The widening of spreads is most harmful with SELL trades as your stop can be easily reached with that spread widening.
Anyway, I will leave you with that and I hope it helps.
Cheers Michael