Part 3: Putting it All Together: Incorporating Volume Analysis with Price Structural Analysis on the AUDCAD

I have established a current breakout trading method which is sound using PSA and low volume node breakouts. I can build on this knowledge with volume to create a stronger thesis for trades.

I am starting to understand that incorporation of basic volume profile and volume histogram analysis can lend further weight to my trades. It dies not change my trading strategy but, with more thought it “may” lead to better executions on certain types of trades where the PSA of the ‘ESTABLISHED’ trading range is more nuanced or complex.

Testing multiple entries and settling on my strategy after non strategic entries failed.

Accumulation Trading Range Failed First Entry Excellent 2nd Entry and a 3rd distribution trade against strategy would have won with times 4RR had I not been a pig with the stop loss.

“Bulls make money, bears make money. Pigs get slaughtered.”

AUDCAD is most active in the London Session / NY Market open. Depending on which assets are moving I can adjust my sleeping pattern accordingly to trade these assets and as I build my income I can adjust my location to best suit the hours of trading for the assets that are moving.

Another great re-accumulation trade, 1st one was a loss due to stop loss miscalculation and the 2nd was a re-entry with the correct stop loss calculation.

I am beginning to find that this is the majority of my losses. I am selecting the correct breakout points but execution timing and stop loss placement can be off. I also have a fear of placing a larger stop loss which is unfounded and irrational.

Trading Range locations on the 4 hour hour chart

CONCLUSION:

Most of my losses (not including experimental trades where I break my own rules) come from entry and exit miscalculations in the trading range that I am attempting to execute a trade on. What this tells me is that for each trade I have the opportunity to take I have the opportunity to take a loss on. Therefore if I only get 1 good range per week to execute a trade on, the law of averages tells me that this range will likely produce 2 trades 1 win and 1 loss.

Therefore it is reasonable to conclude that if I have access to a full trading week I can execute trades 2 trades per week.

So long as I get my emotions in check I do not get on losing streaks. I do not really take 3 or more losses in a row. Thus I can start 0.5% risk 1.5% reward and at 3% or 4% in net profit I can look to increase this 1% risk 3% reward.