Quote from romik:
Even though this hasn't happened yesterday, I'll explain why this is still possible and using Martingale approach puts a trader in profit eventually 100%. On the chart you can see a WRB that happened on Wednesday, the shape of this wide range bar is almost perfect (only a tiny shadow at the top and long body), these price action formation means that on Wednesday demand has outstripped supply, it doesn't matter what was the REAL reason behind it (max pain or whatever else), most of us haven't got a clue what affects price oscillation in any given financial instrument, that's why our main interest is in the chart patterns. My S/R levels are the High and Low of these WRBs and I trade breakouts of these levels using Martingale strategy. In regards to Wednesday WRB range I estimated 1271.50 upon breakout of the High of the bar, that is simply based on my research. One can trade these WRBs intraday, in fact that's what I mainly do in the mornings and afternoons. Anyway, getting back to what has happened on Thursday. If I was to open a Long position upon breakout of the High of Wednesdays WRB I would have had a hard stop @ either 2-3% of my trading capital or maximum @ 1250.00 (!don't forget I am referring to cash index here!) and I would have been stopped out yesterday for something like a 10 point loss. One can ask - It's pretty normal for sellers to drive the price down after such a WRB, why did you enter a trade at the High of the WRB? The answer is that it does happen, but it does not happen all the time and if one was to look on the historical charts and made some observations as to what is the ratio between pullbacks and breakouts after a WRB would be able to understand my approach. Now, the stop's been triggered and I would wait for another approach of either the High or the Low of this WRB and double next position size, if it does not happen again I would double the next time and eventually (in my experience it does not happen more than 3 times) I get a 100% winner while offsetting all previous losses.
The bottom line is that healthy capitalisation and strict position management rules make this strategy work all the time. This strategy applies only to certain ranges of WRBs and will work forever, no matter how many of us use it.
Gary, I have posted this here as it relates to S/R based trading and I am certain it will benefit at least one person reading your journal, which I am fond of.
Romik
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Could you please post a chart?