Taking my lesson from the Perfection Trap, a bold look at what works and does not in Meantrades trading. After accepting that horizontal lines based on some secret Fibonacci on Gann type formula are at best random and accurate less than 40% of the time, I took a second look at what is important in support and resistance trading: where were there buyers and where were there sellers. There are 4 undeniable price points everyday, all else is anathema.
With that in mind we can take these price points and potential support and resistance lines for each day. Meantrades have always been about finding price points for entry where one would consider the market at a disequilibrium. If we are to trade at previous closing prices which printed on the chart, we can assume there is some intrinsic value at these price points.
From Friday's London session we saw two ideal setups.
These price points are not guaranteed levels of reversals but they are relevant almost every day. Markets push and pull, give and take, they never break out without retracement. We just need to catch a single wave each day to become rich.
Applying our traditional mean trade setup(with one small adjustment, we only take the reversal after price crosses the supertrend level*), testing of the preset levels for the day, there are very nice trades coming out with these OHLC levels.
How simple, how elegant.
One added bonus of shifting this method of creating support and resistance lines is that the first trade of the day happens MUCH earlier than all previous versions of meantrade. Most days there is a very powerful signal during the Asian session, which is quite convenient.
Here are the results on GBPUSD from last week:
*the benefit of using the supertrend "crossover" (basically just the price reversing strong enough to crossover the supertrend stop line) as opposed to previous methods of stopping is the use of leverage more effectively. Taking small losses allows trading in multiple markets simultaneously without any additional account risks. Bad trades are exited efficiently. There is no overnight exposure. All the typical benefits of an intraday system are now employed, another positive effect of refining systems and the mental escape from The Perfection Trap.