Working on a backtesting strategy recently that has proven to have a favorable expectancy. I named it Hang 6 but its basically a structure trading strategy that employs a minium Combined Technical Score ( CTS ) of 6. Will be watching this as it progresses but heres what I am currently looking at:
- Minor structure area (within major structure area on higher time frame) = 1 point
- Fib confluence = 2 points
- Pattern = 1 Point
That renders a CTS of 4 but theres a likelihood that if price action (PA) moves into the area that:
- divergance = 2 points
- overbought (I define as 75+) = 1 point
Giving me permission for a short entry. I am placing my stops @ 127% Fib extension of 161% Fib of AB w/in as per my plan albeit I have them at the 141% extention of the pattern on the chart but will be subject to when (or if) PA renders the aforementioned reading.
I have my first price target (1/2 position) at 61% fib retracement of the move into the zone. If we get there, I move stops to break even and shoot for 161% extention of that PA.