| I started this Newsletter to share Extremely Helpful Trading Things I Found while Running Personal Trading Experiments, Testing Strategies, and Other Price Simulations. | (This stuff usually doesn't make it into a video. So, most things mentioned here will be Exclusive to this newsletter!) | | Take one of the Best and First Trading Strategies I used, for example: | It got a Win Rate of around 77% in one of the Personal Tests I was doing. That's Crazy Good! | The thing is, I have been using it as one of the main strategies for more than 7 years. | In the old days, I was getting around a 60% win rate with it (1/1 Reward/Risk Ratio). But back then, I was also a beginner. | As my experience grew, I wanted to see the strategy's current win rate with everything I know now. The 77% high win rate I got exceeded my expectations! | | So, what was the 60% Win Rate Old Strategy and How did its Win Rate Increase to 77%? |  | I analyzed 100 Support Resistance and found this |
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| In the above video I made a while ago, I showed how my method of drawing Support/Resistance gives around a 60% Win Rate with a 1/1 Reward/Risk Ratio. Since I started as a Price Action Only Trader, my old 60% Win Rate Strategy was basically that with the following Candlestick Patterns used as the entry points. |
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| | This Support/Resistance Method with the Best Candlestick Patterns I found worked beautifully to get in the Top 10% of traders (i.e. not continuously losing money)! |
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| | What Did I Change To Increase Its Win Rate? | Over the years, while using this strategy, I learned the following important things: | Since trading major support/resistance was many times a reversal strategy, major S&R areas rarely appeared in the direction of the trend. That was kind of a bad thing because we generally want to avoid going against the trend as much as possible. But even in a good trend, I noticed that the price was reversing from my major S/R areas many times. The price reversals were not big, but they still used to happen often. I also realized that the reversal momentum many times drops as the price moves away from or outside the the support/resistance areas. Since the trading activity near the S/R areas used to increase, the price also used to get choppy or noisy. Finding good candlestick entry patterns between the choppy price movement was getting difficult at times.
| | Solution? | Set the profit target before or at least near the end of the support area as much as possible, just as the reversal momentum ends. This usually resulted in a 0.5/1 Reward/Risk Ratio instead of 1/1. Regular viewers of Trading Rush might have noticed that this R/R ratio update immediately boosted the win rate to around 67% because that's the breakeven win rate with a 0.5/1 Reward/Risk ratio. This, combined with the "Booking Profit before the reversal momentum ends" logic, the win rate potential increased to +70%. To fix the choppiness problem, I started using MACD to see the momentum change as well.
| | Here's How It Worked Step By Step: | Step 1. Draw Support Resistance using the method I taught in the above Support Resistance Video. |
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|  | Step 1 |
| Step 2. When the Price comes near the support/resistance area, use the MACD crossover to find the entry point. For a Long Entry: The MACD Line should cross above the Signal Line. This Crossover should happen below the zero line of the MACD. For a Short Entry: The MACD Line should cross below the Signal Line. This Crossover should be above the zero MACD line. |
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|  | Step 2 |
|  | Step 2 Zoomed In |
| Step 3. Set the stop-loss below the support area in a long setup. And above the resistance in a short setup. |
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|  | Step 3 |
| Step 4. Set the profit target using a 0.5/1 Reward/Risk Ratio, which is 0.5x or half the stop-loss distance. Very Important: If the profit target is going too far from the end of the support/resistance, then it's better to avoid taking the trade. Remember that we need to exit before the reversal momentum ends. |
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|  | Step 4 |
| | I Tested these Exact 4 Steps 100 Times, and the Win Rate I got was a High 77%! | Winning Trades in a Row = 21 Lost in a Row = 5 The Profit Graph was going up pretty nicely! |
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|  | Testing Data In The Trading Rush App |
| Because the Win Rate is higher, and the number of losing trades in a row is relatively low, I many times increase the risk per trade a little higher. For example: The 60% Old Strategy used to have a lot of big losing streaks, especially if the market got bad. So, I couldn't increase the risk per trade by more than 2%. But with a 77% High Win Rate Strategy whose breakeven Win Rate alone is high(around 67%), I can increase the risk per trade a little more, like 3%, and still have a relatively lower risk of losing big. Obviously, a beginner trader in the learning stage should not be risking more. A trader without good trading psychology can still blow up the account! |
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| | One of the Trades I took using the Same Strategy and Shared in the Trading Rush Discord Server with Patreon Supporters: | | | | |
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