Zen Trading Tech

Introduction

• In the video below I talk about how I traded a great long, only to trap myself out of a great short.
• I was live in the trading room and it was a mistake to spend too long patting myself on the back while an even better swing set up. Something for me to continue to improve in my trading.
• Trading live exposes existing weak points, make them larger, but does not create new ones such that i’m aware of.
• Discussions around a rare, high-probability occurrence that can provide an edge in trading systems

1. Introduction
2. The Video
3. The Setup
4. Yesterday’s Trade
5. How to research this O==L, O==H trade
   1. Indicator
   2. Start with the Daily Chart
6. Could I trade it on the hourly?
7. When B1 60m is a fade?
8. Finally found a time it didn’t work
9. 15m Chart
10. Conclusion

The Video

The Setup

• In short, RTH Daily bars have tails – it is VERY rare for them not to have them.
• In particular a BULL bar with no bottom tail, or a BEAR bar with no top tail.
• That is what we are researching.
• If a bar opens on its high or low, it is a VERY high-probability fade back to it

Yesterday’s Trade

• Full disclosure, I was long to near the high of the day where I got outt and I missed all of this down move! So this is admission of hindsight trading and homework for me to improve for next time.
• In short, Daily bars have tails – it is VERY rare for them not to have them.
• In particular a BULL bar with no bottom tail, or a BEAR bar with no top tail.
• That is what we are researching.

How to research this O==L, O==H trade

• What’s our process?

Indicator

• Indicator available for free here (code is open)

Unlock Powerful Insights With a New Indicator: Open on High, Open on Low

• Start with the Daily Chart

Start with the Daily Chart

• 14 occurrences in 2494 bars (about 10 years) = 0.5%
• 99.5% chance it does not happen – what an edge

• So now we have an edge on the Daily chart

• The market is fractal – hourly chart – 16 times in 635 bars = 2.5%

Could I trade it on the hourly?

• 1:1 RR trades on the hourly

When B1 60m is a fade?

Finally found a time it didn’t work

15m Chart

Conclusion

• I will be better prepared now for this setup.
• I had thought I had reviewed it enough in the past, but being unable to trade it is the best indication I know that my work was insufficient.
• And that’s great news because it can be added to me repetoire.
• Hopefully this process helps you improve your own trading.