My last trade was not a successful one (the purchase of USDCHF). My take-profit target was eventually hit, but not until after I was stopped out of the position, with both events occurring after I had retired for the night.
This would not have happened had one of my conditions for entering positions been to wait for rates to deviate at least 0.15% above or below the yellow brick road. On the other hand, this is never going to happen when the slope of the road is too steep, so maybe I can use the amount of separation between the road and the longer-term trend lines to gauge when the trend is so strong that this condition should no longer apply.
I was able to make up the loss from the USDCHF trade, but the ratio of average profit trades to average loss trades was bad, and in reviewing the choices I made, I realized that I did not abide by my plan to only enter trades where rates deviated at least 0.15% above or below the yellow brick road.
Then again, if I had, I would not have made any additional trades at all, since the market was kind of dead last night.
Things picked up this morning, but it was while I was still asleep. The only opportunity left to test my 0.15% theory once I woke up was selling EURAUD at around 1.6058. It looked like a good move given that the yellow brick road was below the longer-term trendlines, the relationship between the two longer-term trendlines had reversed from bullish to bearish, the global trendline was pointed south, and the two longer-term trendlines were below the global trendline.
Most importantly, candlesticks had begun forming beneath my trusted twin moving averages, which had hooked southward. But as good as these two indicators are, they WILL repaint as additional candles form, and the hook disappeared as newer candlesticks formed ABOVE the twins.
I will therefore have to adapt how I implement my system by entering trades after one or two candles open and close below the hook on a HIGHER timeframe chart.
As for the advice I gave myself to not overlook maintaining awareness regarding whether the trusted twin trendlines are above or below the center of the green momentum channel, this recommendation is being reinforced by what I am seeing this morning.
Consider the possibility that when rates deviate more than 1.15% (i.e., 1.50% or even 1.70%) above or below the yellow brick road, that added "safety" of waiting not only for a hook in the trusted twin moving averages with candlesticks forming to the inside of the hook, but
also for similar developments with respect to the center of the green momentum channel, might be worth a few missed opportunities and/or the loss of a few potential pips profit.
