Utilise your trading journal to find your 3 most traded pairs.
Once located, select one pair to begin this process with.
Let’s say you’ve chosen EUR/USD – you now proceed to the HTF picture (the 1W + 1D) on this selected pair.
Begin to use these two HTF’s to locate the value areas dating back to 3 years prior to when you begin this process in real time. Meaning, if you begin this process on the 09/09/2021, you would be searching back 3 years prior to this date as a cut-off point. These are simply areas such as double tops, double bottoms and / or outer structures of larger patterns. Essentially, you are finding areas where something occurred – a reversal. Using the HTF for this ensures you are utilising areas of value, not just any random double top, bottom, or outer structure. Ensure you do this in chronological order, not all at once.
So, let’s say that you have located your first area of value – a key daily high. This is what you are to do next as part of this fifth step:
Note how the first orange box on the left illustrates how something occurred here. Meaning, there had to be major selling to then classify this as an area of value on the HTF. Next, simply observe what occurred approaching, at and after the area of value. Approaching (green box) and after the area of value (purple box). Let’s move onto step 6 over on the next page.
Now that you have made your observations, all you are going to do is note down (via a self-made tally chart) which patterns occurred, which played out and which did not. Keep it this black and white. You may be thinking, how would I know what to trade if I am not using a plan? Here’s the trick – by now you should have a VERY good analytical understanding of the strategy. Thus, all you are doing is observing any setups at the above designated areas so long as they are within the confines of the system. What we like, dislike, feel comfortable or uncomfortable with doesn’t matter. What matters is what works and what does not – it’s a binary business. We are to include setups that don’t just occur once every blue moon but, setups that occur on a frequent basis and play out more times than not.
The next step is to simply repeat the above process over your remaining 2 pairs. Exactly the same process. Have no emotional involvement of what you think should be right or wrong, let the market show you that.
The final and most crucial step of all. Now that you have accumulated tally data for your 3 pairs, regarding which patterns and setups occurred, won, and lost, you are going to do something special. Now, look at your data and circle those patterns that occurred the most. Let’s say you found that on EUR/USD, you observed that channels at key value areas occur frequently and play out exceptionally well. All you are going to do is note down the similarities and differences between those channels that played out, and those that did not. Do this for each of the mainly occurring and winning patterns + setups you find on your 3 pairs. Here’s the trick: based upon your similarities and differences between those that play out well and those that do not, you are to use this to formulate a simply yet powerful entry and invalidation criteria. This will build a VERY strong plan in which you can have exceptional confidence in.
