Trading GBPUSD | Judas Swing Strategy 13/05/2024
At 8:25 AM EST, we got to our trading desk and started the day doing the basics on our Judas Swing strategy checklist which includes:
- Making sure the timezone is set to New York time
- Making sure we're on the 5 min timeframe
- Marking the trading period from 00:00 - 08:30
- Marking the high and low of the zone
Next, we patiently awaited price action to take the liquidity positioned on either side of the trading zone, providing us with a directional bias for the trading period. In this instance, liquidity was taken at the highs after 10 minutes, signaling our focus would be on identifying potential selling opportunities.
To avoid getting trapped, we waited for price to create a Break of Structure (BOS) to the opposite side (sell side) to indicate selling. Subsequently, our focus shifted to identifying the initial Fair Value Gap within the displacement leg that broke structure.
Next, we waited for price to retrace, filling or touching the created Fair Value Gap (FVG), and only executed our trade once the candle that touched or entered the FVG had closed. In this case, the subsequent candle that formed was a bullish one, closing within the Fair Value Gap.
Our stop loss is set above the high that formed the Break of Structure (BoS) leg, with a minimum requirement of 10 pips. In this instance, placing the stop loss above the high would result in only 7 pips, necessitating an increase to meet the 10-pip minimum. This rule was established not by chance, but through extensive backtesting of numerous trades, demonstrating how it prevents us from being stopped out before price moves in our favor.
After executing our trade, we experienced a significant drawdown that nearly reached our stop-loss level, only for the price to eventually reverse in our favor. Had we set a 7 pip stop, we would have been stopped out; however, our rule of a minimum 10 pip stop saved us from that outcome.
Although the price reversed again and entered a drawdown, we remained unfazed by this reversal due to our cautious risk management strategy. We had committed just 1% of our capital to this trade, with the prospect of a 2% return. We maintained confidence in our strategy, given its extensive backtesting, which has demonstrated a win rate of 52% on GBPUSD trades.
The GBPUSD pair then consolidated around our entry point, prolonging our involvement in this trade. However, based on our collected data, we anticipated an average position duration of 6 hours and 35 minutes, which could extend to 2x-3x longer for the trade. Patience is crucial in trading, as it often places you in challenging situations
We patiently waited, and our persistence paid off when our target was finally reached, securing a 2% gain on the trade where we had risked 1%
- Making sure the timezone is set to New York time
- Making sure we're on the 5 min timeframe
- Marking the trading period from 00:00 - 08:30
- Marking the high and low of the zone
Next, we patiently awaited price action to take the liquidity positioned on either side of the trading zone, providing us with a directional bias for the trading period. In this instance, liquidity was taken at the highs after 10 minutes, signaling our focus would be on identifying potential selling opportunities.
To avoid getting trapped, we waited for price to create a Break of Structure (BOS) to the opposite side (sell side) to indicate selling. Subsequently, our focus shifted to identifying the initial Fair Value Gap within the displacement leg that broke structure.
Next, we waited for price to retrace, filling or touching the created Fair Value Gap (FVG), and only executed our trade once the candle that touched or entered the FVG had closed. In this case, the subsequent candle that formed was a bullish one, closing within the Fair Value Gap.
Our stop loss is set above the high that formed the Break of Structure (BoS) leg, with a minimum requirement of 10 pips. In this instance, placing the stop loss above the high would result in only 7 pips, necessitating an increase to meet the 10-pip minimum. This rule was established not by chance, but through extensive backtesting of numerous trades, demonstrating how it prevents us from being stopped out before price moves in our favor.
After executing our trade, we experienced a significant drawdown that nearly reached our stop-loss level, only for the price to eventually reverse in our favor. Had we set a 7 pip stop, we would have been stopped out; however, our rule of a minimum 10 pip stop saved us from that outcome.
Although the price reversed again and entered a drawdown, we remained unfazed by this reversal due to our cautious risk management strategy. We had committed just 1% of our capital to this trade, with the prospect of a 2% return. We maintained confidence in our strategy, given its extensive backtesting, which has demonstrated a win rate of 52% on GBPUSD trades.
The GBPUSD pair then consolidated around our entry point, prolonging our involvement in this trade. However, based on our collected data, we anticipated an average position duration of 6 hours and 35 minutes, which could extend to 2x-3x longer for the trade. Patience is crucial in trading, as it often places you in challenging situations
We patiently waited, and our persistence paid off when our target was finally reached, securing a 2% gain on the trade where we had risked 1%
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Test trading strategies on crypto, stocks, indices, forex with decades of 1-min data.