Gbp testing on daily I4Bs.

Regarding my post above I thought I'd post a chart to make it clearer.

Yes sir, I would have taken that as a trade if I had been on here for the break high and, you betcha, it would have been a loss after I saw how the next daily closed when I went short.

Great Mike, thanks.

I'll post my backtest results here after my project this weekend. Going to start on the USDCHF. 5 years of I4Bs. And then work my way through the majors.

Edited to add: Can I ask another question about the GCAD? When you saw the bearish pin/OB the next day would you enteron the break of the I4B south or simply at the close of the pin?

I saw the pin close, saw the price action on the lowers, then waited to get in until 1.8000. If the pa on the lowers (4 hour) were right, I would have entered on the break of the pin bar and then again on the close of the IB. That wasn't needed though.

Well I am in the middle of my testing and I absolutely see the huge potential here.

The "wait for the 4H close above the consolidation" rule is genius. Saves a lot of bad trades. I like to wait for a 4H close 10-15 pips above the range because there often seem to be closes just a pip or two beyond the range before reversing.

Where I am scratching my head a little is in trying to work out trade management. I want to maximise profits, allow for the big runners, but also protect myself. So the interesting question is, where to go to break even?

I know you operate a partial profits theory Mike, where you take half off the table at a certain point and let the other half play out (without going to BE). I've never been that convinced by partials (influenced by mbqb11 I think) and it does mean that when the full losers happen they hit hard in relation to the winners.

An alternative is to go to break even at 1:1. I'm considering that.

Only rarely have I seen a whipsaw take me out twice on an I4B. Meaning that I open a position long, get stopped out, open a position short and get stopped out. It's a bummer but it is rare.

The magic of this method is the small risk and potential for huge rewards so I need to find a way to give my trades room, perhaps more so than my style on dailies.

The other thing I am debating is how much attention to pay to location. Unlike a pinbar where location is everything, an I4B seems to be very different. Location and trend are still important, but this seems different.

There's also a lot of magic in playing the price action on the 4H that comes out of an I4B. For example a 4H pin that comes out of an I4B break pointing back into the consolidation, to me that is a stop and reverse signal.

It's very discretionary and hard rules don't work so well. But the potential is huge.

Just some weekend thinking aloud....

I posted this earlier somewhere but thout that since it was I4B related I'd post it here as well. I am using the ICCE fib for take profit level. Let's see how she plays. She has already broken to the downside after the break of the I4B and formed a pin inside the consolidation box. I am looking for a long entry at 1.6777. I am going to bed now. I'll look at this one again in about 8 hrs.

K.I.S.S.

Ok, mike w,
just to clarify, & for the benefit of other readers (to avoid confusion)...
i've kept seeing the word I4B here.
are we into (any) IB's or strictly I4B's?
Thanks Sir!

I4Bs, although on the daily, you can usually play an IB the same way to the same effect. This thread, I think, should just be used to journal up current I4Bs instead of my testings. I've tested a LOT on these and truthfully, the testing is subjective. The other thing is that, on the testing, you are going to see all the same things that you did on the first one that I showed. It's all the same over and over again.

I feel that everyone needs to do the testing on their own for these just as anything else and that showing my testing is kind of a waste? I will say that throughout the testing, all pairs have shown positive for a 5 years span. The problem is that is MY testing and it could be totally different for another person. We'll see and if anyone needs, I'll gladly post up examples whenever.

it's probably a waste to others either because
a. they dont understand it or
b. they dont 'like' it

your journal here is a testament to the efficacy and potential of IB trading.
further examples u post here will definitely be appreciated by at least one soul.

Yeah I'm in two minds about posting my testing of this up on PF. I think it hinders people because they think they can trade off other people's testing results. Which is totally not the purpose of testing. It's to give you confidence and thinking you can trade from someone else's testing is no different to thinking you can play basketball after watching michael jordan practise for a few hours.

That said, can I ask you how you would have handle the UJ 14B that showed up on daily this week. I would have taken the 4H close break north, stopped and reversed on opposing PA when in profit and then would be back in the IB consolidation area now looking for a run further south.

What my testing of this shows is tat the system needs good trade management rules tat allow me to be nimble, prevent too many losses, and don't strangle the trade. The key is knowing when to go to break even, especially given that a lot of these break one way to get the steam to go the other.

Fascinating stuff and thanks for bringing it to my attention brother.

Aaron