The Trader's Perspective

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JDST back testing the 1:2 risk/reward once a trend line or pattern breaks up or down.

This is a slight variation of what I posted on TVIX back test.

I have adopted the trade formula as follows:

1. A full candle MUST form its body ABOVE/BELOW the trend line. This is the SIGNAL to watch for a confirmation as described in 2. (not a buy signal)

2. Price must then advance .10 above/below previous high/low of full candle
as described in 1 above. Best to wait until 2-3 candles after the break to confirm continued trend, this helps to avoid false breaks. This is the BUY trigger.

3. Stop loss is placed .05 below last swing low/high. (actual price of swing high/low is used to calculate exit target)

4. Use the 1:2 risk/reward formula for a profit target to sell or scale
out of position.

Formula for the 1:2 risk/reward
Risk (R) = buy trigger - previous swing low (on a break up)
OR
Risk (R) = last swing high - Sell short trigger (on a break down)
Buy trigger + 2R = target price for break to the upside
Buy trigger(to short) - 2R = target to cover short position

I will do the math on the chart for one and the rest I just marked the target with an arrow and also indicated if the target missed.

I went through and plotted all the patterns and prices first, so I will post several charts and some of them will be cluttered if there are multiple patterns in play, this will keep us in the money as long as possible. Once there isn't a noticeable pattern, it is time to exit those type of plays.

This is all IMHO not meant to advise any buy or sell advise.







This is the last chart with any calculated target. Looks like I would have taken profits at 54.75 if entered at the 43.74 break