“Template” backtest of Alex, GBPUSD, 14/09/20

To begin, I simply look at the screenshot(s) WWA have sent in, in this case it’s Alex, and see
if I can see what they were seeing with respect to the trade idea. Clearly a lot of these will
be on LTF but entry is an important part of a trade, as well as the general setup.

Alex’s screenshot:

He made a comment regarding price missing his m1 entry, so this is something I will try to
focus on when it comes to the trades entry protocol.

After looking at the screenshot I will try to note down what I think the educator was seeing,
important factors of a trade such as liquidity, POI’s, entry etc. E.g. Here we can see that the
TP was placed at an imbalance fill that would tap into a 15m supply zone, makes complete
sense for a TP on this trade as it seems to be counter trend.

- Example spoke about above ^^, to back up the counter trend point, we can see how
strong the sellers were coming into the low and how sluggish buyers have been in
comparison whilst moving back up to that point. Buyers have definitely entered the
market though as we get a fairly major BOS, so we can have confidence in a short
term buy, which Alex was clearly looking for here.

- Clean accumulation looking area approaching the low, liquidity taken with a big push
in the opposite direction that broke structure, albeit very slightly. Price then slowly
moves away from the BOS and creates a set of EQL’s, presented just above the
spring, which most likely has a POI within it. This is what I was originally calling a
price trap before Reim taught us about inducements, you can see the exact same
thing happening on Alex’s 12/08 EU trade which I have also backtested and
successfully implemented.
- There looks to be a really clean entry on a 15m candle I will highlight on this PDF,
from this screenshot notice the FU/inducement that took out the EQL’s and then
broke minor structure – potentially a great entry there but it could be at any time i.e.
if it’s Asian session I wouldn’t be awake to entry, so right now so I can’t conclusively
say it is a valid entry. A second entry could maybe have been taken from the high of
the BOS… the IFC sitting below the area that went on to create a really clean test of
the demand area, this will be investigated further.

- Final point on price action, even though sellers were clearly dominating, the round
off of the market was so clean, which would have given me confidence we could get
into a short term buy. Ideally, we’d always like to see price round off like this as it
approaches a POI.
HTF Overview:

Here I simply do a top down analysis to gain the overall perspective of market direction, I
don’t often go to 1W anymore when backtesting an educator’s trade/setup, but I’ll just do it
for completeness. It may also just help on things to look out for when doing a top down
analysis.

^1W TF^: Bearish, with bullish intent

To begin, I do exactly what we would do with a LTF chart… mark-up relevant POIs (IFC,
imbalance, major highs/lows), determine what the overall structure is, is there any obvious
liquidity points etc.

- Whilst we have been bearish due to the fact we have not broken the major W high,
price has started to move with strong bullish momentum since we hit the 1.14116
price point. This may be due to the accumulation in price we have been having over
the last few years, note the SC at 2019, ST/STB September 2019, and potential spring
early 2020. This was also one of the lowest GBPUSD rates seen in 20/30+ years so
speculators could see this as a highly discounted entry point.

- 1W POI marked out at approx. 1.26, this area could present a solid buy opportunity
as it looks like a strong demand zone (based on the fact price went on to break the
minor high and the strength of bullish momentum coming out of the candle). The
relevant sell POI has been marked out at approx. 1.42 too, though this is most likely
weeks/months away from current PA and isn’t relevant to price right now.
 - What we can take away from this screenshot is that price looks to be favouring
sellers up until the 1.26 price point, where we may see buyers entering and
dominating the market again.

^1D TF^: Bullish

Rinse and repeat what I did for 1W.

- Approaching an interesting POI that has been refined from 1W TF to the 1D. Could
see the potential for buys in this area. Also highlighted the most relevant supply zone
POI (closest to current PA), though there is a pocket of liquidity sitting above it that
could take us up to a higher POI.

- 1D market structure has been making a clear series of HH/HL’s, with the last month
or two breaking a major 1D high. I see the “D Low” as a highly significant point of
price, as if we do not get a reaction from here, I think we could be longer term
bearish. There is a low sitting below “D Low” (D Low 2) that could provide a reversal
too, but if this is broken I’ll be very bearish on GU.

- Recent days/weeks have been very bearish so I think sells would be most appropriate
right now for swing trading, though obviously we could catch solid counter trend
trades as well if the opportunity presents itself.
Intraday Overview:

This is the point it gets interesting as its much more relevant to the trade idea or if you’re
doing a top down, closer to a POI you would be looking to be trading off. If you are doing a
top down it may be long to begin with but think that you will only need to do daily every
week or so, weekly every month or so. Daily/Weekly TF will obviously take a lot longer to
change from bearish to bullish/bullish to bearish that 4H/1H/15m etc so it’s just something
that needs to be kept in mind whilst doing your daily trades e.g. if we’re bearish on HTF we
should be looking to hold sells as they are pro trend, and get out of buys/partial out buys
fairly early as they are counter trend.
Now just do the exact same thing with 4H as what was just done with 1D/1W.
Also rewind back to the time that Alex sent in the trade, should have done this before really
but it’s too late now haha. The replay on this is going to the day before the trade to give a
clear overview.

^4H TF^: Bearish

- Clear BOS on the 4H that took out a decent chunk of internal liquidity, and EQL’s.
Generated a POI that was a reversal from a demand to supply point.

- Just made a LL but price is beginning to stall, giving the potential for a reversal to
clear up the imbalance and react from the POI.

- 1H is almost identical so now I’ll go into the 15m to try and replicate Alex’s view of
price on the day of the trade.
Momentum TF overview and entry ideas:

Rinse and repeat again, where are the POI’s, where could we have got an entry, would the
entry have been stopped/activated/had a good R2R?, what was the max R2R achievable etc
etc.

^15m TF^: Bullish post BOS

- The POI I mentioned at the start of the PDF was considered here and would have
given a nice clean entry with a max R2R of 1:47 – great R2R considering it’s a counter
trend trade. Unfortunately, the timing of the trade would have been at approx.
1:30am, which obviously means I would have missed the entry. Time to look for
other potential entries and see if we can spot Alex’s.
^3m TF^: entry ideas post Asian session

Here, I looked at the time from 7am (UK time, reasonable time for me to trade) to see if I
could find any opportunities. Simply looking at price action to see if I can spot entries I
would realistically take live.

- Found 2 potential entries from the 3m TF, the lower entry was super clean but the
higher one would have had me sweating.

- Lower entry would have been activated around 8:45am, great time to trade (LDN
open) and would have resulted in a 1:12 trade – leaving plenty of room to take
partials and BE. Price eventually went on to reverse at 1:12, before going below the
entry and reversing again, resulting in a BE with partials taken at 1:10. The same
clearly happened for the higher trade, though because of the smaller SL this trade
would have hit 1:13; similarly to the earlier entry, this would have given plenty of
time to BE/take partials.

Although I could have caught a decent % from these trades, the potential of the GU move
was much greater – further investigation will be required to find the potential entries that
could have been taken after the above hit BE.
After referring to Alex’s screenshots again I have noticed his entry, so I will cover this before
continuing.
^5m TF^: Alex’s region of interest

- Firstly, we can see that the IFC of choice is sitting near the Asian midline, an area of
liquidity that can provide reactions. There are other IFC’s near the Asian midline, but
the one Alex chose is by far the cleanest.

- The IFC also provided the reaction that went on to create a minor BOS, as well as a
more major one, adding confluence to the IFC.

- It followed an FU (fairly minor), so we want that FU to break structure or else it was

just a liquidity hunt & continuation, rather than a reversal. The IFC in question was a
test of this FU, if it went lower and broke the low made by the FU clearly the market
would still be bearish.

- It seems like price simply re-tested the high made before the FU candle continuing
upwards, although I have just noticed that a decisional demand point was created in
this region too – it lead to the BOS of the lower structural point I highlighted, this will
be explored now.
^5m TF^: Best realistic entry I could find prior to the major impulse on the 15th

- Entry occurs in pre-london approx. 7:30am, not a bad time to trade. Entry based on
the decisional demand IFC, giving a strong upwards price impulse.

- The only problem with this trade is that the test of the demand area that occurred
the next day could have triggered a BE is spread was poor (+ it’s Asia session so we
wouldn’t expect low spread). This would obviously be a massive pain, but I’ll attempt
to find one more entry post Asian session for the 15th of September. Another point
includes the fact that I would most likely have taken off most of the volume
following the PA displayed, which is one of the things I do too often, even for solid
trades. This is something I am currently working on to improve.

- Trade would have maxed out at a 1:57 R2R before reversing for a big sell off.
The final section is split into 2, the 5m entry and 10m entry. This is simply to highlight how
LTF can often lead to missed entries and therefore missed opportunities, whilst the higher
TF’s can still give great R2R trades but with a higher likelihood of you being tagged in the
trade. When trading off Asian session, 10m/15m IFC’s tend to be much smaller than
LDN/NY, here you could have entered off a 10m candle with a 4.1 pip SL. Therefore, going
forward, I won’t refine my Asian session IFC’s too far to try and get that suer low SL, as it
may mean my trade won’t be tagged in. Also, the 10m trade was based on the Asian midline
so we don’t want to refine too much as we may just react off the major liquidity point, rather
than a specific IFC (I have seen his happen many times whilst backtesting).

^5m entry^: Missed by 0.2 pips

- First thing to note is that this trade clearly would have not been activated, may have
been lucky if I overcompensated for spread or added a few pips to ensure I was
tagged in but most likely would have been a miss. SL was 3.1 pips so there definitely
was room to add a few pipettes either side but this is all in hindsight.

- R2R would have maxed out at 1:53, really solid with a clear TP in sight (see POI
marked up at the start of the PDF. Wouldn’t have reached the final TP but once price
had broke structure on 15m/1H near the TP (as it did), this would be a great
suggestion to take major partials and leave a minor % volume running. Price was so
close to the POI so the potential losses from a reversal would far outweigh losing a
few % from not having a fully maximised R2R.
^10m entry^: clean entry w/ strong R2R

- Can see that the fill of the imbalance from the 10m IFC gave a great entry and
instant reaction. SL was inflated by 1 pip, to 4.1 pips vs. the 5m entry (3.1 pips).

- R2R maxed out at 1:41, same thing applies to the last trade, take partials early and
once we had a 15m/1H BOS near the POI/TP, time to take major volume off the
table.

- Another example where a smaller TF would have been useless vs. the 10m. I typically
use 1/2/3min for entries but if we already have a refined entry (5 pips + below) it can
burn you if you try refine it down too much. Everything is on a case by case basis
though; some circumstances will make sense to refine further and some won’t.
Summary

In my opinion, this is one of the most important parts of the whole backtesting process.
Whilst finding the entries, best trades, new takes on concepts, building confidence in
concepts etc is why we backtest, if we don’t take note of our findings then we could simply
forget what the main point of the whole backtest was. To avoid spending hours backtesting
with no real solid outcome, I document (as seen on this PDF) and make sure I take away at
least one main learning point away from it. In this example, this would be not needing to
refine too heavily when trading off an IFC in the Asian session. A point I’d add to this is that
I’ve seen this happen loads, and before I did this backtest I 100% knew that this was the
case. Even though I knew that this was true, specifically documenting it and thinking about
it in depth has implanted this whole idea and the logic behind the idea firmly into my head;
therefore, next time I come across this situation, I should think of this point in time. This has
worked with me with many different concepts and for me, it works really well.

Another point is that you can see in my document that whilst I stuck to the main point of
backtesting Alex’s trade, extra things came up that I wasn’t expecting, and I went over these
points as well. When I first started backtesting I would look at Alex’s trade and do exactly
what I did at the start, state the things I saw from the screenshot BUT… I would then leave it
at that, maybe backtest the actual entry at the very most with no real documentation being
made. Notice in this PDF, that whilst I did do exactly that, I also found myself analysing
entries I would potentially take, finding an entry out of my time zone so I had to adapt and
attempt to find another, my new entries then would have hit BE before the major impulse
so I had to find another entry, new entry would have been missed on 5m but on 10m would
have been brilliant, documented how the Asian session candles don’t need too much
refinement, worked out what went wrong/right with Alex’s entry, practised a top-down
analysis etcetcetc. All of this is in some way related to the backtest but also could easily
have been left out, I could have just kept this whole backtest & every backtest I do 1 page
long. The reason why I don’t is that I personally don’t learn much at all when I do that, and I
learn masses of things by going really in-depth with everything I do. The first two pages are
simply remarks from a screenshot, think about this as a teacher describing how to solve a
maths problem. The rest is me doing the calculations myself, doing the calculations wrong,
refining the calculations, adding my input on the calculations, working out what was going
wrong/where I could improve etc. For me, it’s obvious which one aids my learning more,
and hopefully it will be to you too.

- Implanted the idea into my head that refining too much for Asia isn’t always
necessary, great example here that the 10m TF would have provided a perfectly
reasonable 4.1 pip SL, whilst ensuring that the entry would have been tagged in and
a high R2R could be achieved.

- From the off could see what Alex was seeing, my remarks from the start about the
trade being HTF counter trend/having the supply POI as the TP played out. Also
cemented the fact that this POI/TP may never be touched; if I am in this situation
and 15m/1H breaks structure near my POI I will be taking heavy partials whilst
leaving very little volume on the table, as it’s a counter trend trade.
- Understood Alex’s perspective and hopefully determined why price left from the
area that he marked out rather than his entry. Put my own perspective on the trade
and found entries that I would take at reasonable times. Found an entry that would
have overcome the BE/heavy reversal and maximised the pips on offer.

- Going to continue using the 0.618 & 0.382 fib levels to determine a midpoint of the
Asian session rather than the 0.5, i.e. 0, 0.382, 0.618, 1 fib levels vs. 0, 0.5, 1.