Part 22 - Invalid signals

There are 2 occasions when I will not take perfectly good signals that qualifies under the rules in the previous sections.

There is prob 3 exception to this and they are as follows

1 -The invalid signal occurs just below high of the day and is a short

2 - The invalid signal occurs just above the low of the day and is a long

3 - If I have had a very good day and wish to take the risk knowing a maximum loss of $100 wont effect me being profitable for the day.

At the time of writing this section (1st march) 28th Feb yielded $1800 and the 27th Feb yielded $2000 trading the one contract. Both of these days mid way through the session I took the riskier signals.

Here are the 2 exceptions

1 - The trigger candle was 10 ticks ot larger

Reason for not taking – As our maximum stop is 10 ticks the price could easily pull back the full breadth of this candle over the next 2-3 candles and give us a losing trade

2 - The close of the trigger candle was more than 10 ticks for the moving average which acts as our stop

Reason for not taking – The moving average is there for 2 reasons

To support our trade
To close out our trade with a small loss if it goes against us

If we take a signal that’s 10 ticks or more away from the moving average we open our selves up to the 2 conditions above.

Example. We take a long signal the close or our fill is 12 ticks above the moving average. Our stop is 10 ticks and the price pulls back to the ma and we get a 10 a tick loss. The system then gives us another signal that qualifies under the mains rules and goes up 10 ticks. To wait and take the correct signal gives us 10 ticks of profit to take both gives us zero