Trading EURUSD | Judas Swing Strategy 07/05/2024
At 8:35 AM EST, EURUSD initiated a liquidity grab above the 00:00 - 8:30AM EST Zone with a Bullish Marubozu candle. This move could potentially trap breakout traders, as it appears to signal an upward move, only for the price to swiftly reverse course.
To avoid getting trapped, we waited for price to create a Break of Structure (BOS) to the opposite side (sell side) to indicate price wanted to sell. Subsequently, our focus shifted to identifying the initial Fair Value Gap within the displacement leg that broke structure.
Our preferred entry strategy involves patiently awaiting price retracement into or touching the Fair Value Gap (FVG), with execution of the trade occurring upon the close of the first candle entering or touching the FVG. This approach was not arbitrary, rather, it emerged as the result of thorough backtesting of numerous entry techniques. We have found it consistently provides better entry points and occasionally prevents us from taking trades that might otherwise trigger a stop loss within the same entry candle.
Following our trade's execution, we endured a brief drawdown of about 20 minutes. We were undeterred by this temporary setback because we had a prudent risk management approach in place, we had allocated only 1% of our capital to this trade, while eyeing a potential 2% gain. We maintained confidence in our strategy, given its extensive backtesting, which has demonstrated a win rate of 52.78% on EURUSD.
While our data typically indicates an average trade duration of 8 hours and 27 minutes, our target was achieved in 2 hours and 15 minutes, securing a 2% gain on the trade where we had risked 1%
To avoid getting trapped, we waited for price to create a Break of Structure (BOS) to the opposite side (sell side) to indicate price wanted to sell. Subsequently, our focus shifted to identifying the initial Fair Value Gap within the displacement leg that broke structure.
Our preferred entry strategy involves patiently awaiting price retracement into or touching the Fair Value Gap (FVG), with execution of the trade occurring upon the close of the first candle entering or touching the FVG. This approach was not arbitrary, rather, it emerged as the result of thorough backtesting of numerous entry techniques. We have found it consistently provides better entry points and occasionally prevents us from taking trades that might otherwise trigger a stop loss within the same entry candle.
Following our trade's execution, we endured a brief drawdown of about 20 minutes. We were undeterred by this temporary setback because we had a prudent risk management approach in place, we had allocated only 1% of our capital to this trade, while eyeing a potential 2% gain. We maintained confidence in our strategy, given its extensive backtesting, which has demonstrated a win rate of 52.78% on EURUSD.
While our data typically indicates an average trade duration of 8 hours and 27 minutes, our target was achieved in 2 hours and 15 minutes, securing a 2% gain on the trade where we had risked 1%
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