Filtering Out Unfavorable Setups

I set up two of Mark Melnick's one-and-done's this morning before the market open.  I had BA long and FB short.

On the OAD's, we've added a couple of optional filters.  You can ignore the trade if the first candle doesn't close above the open for a long or below the open for a short.  You can also have it filter if the candle doesn't close within some percent of the candle range's high for a long or low for a short.

OAD's are high stress situations.  They also happen to be one of the most consistent and profitable trades that I do, so they are worth the stress.  Things are moving fast, you're evaluating several charts at once, and you can really only do one each day, because they all happen at the same time.

Unless you're using some kind of an algorithmic trading tool.  So I set up these two OAD's, and sat back to let them do their thing.

Fortunately or unfortunately, depending on how you look at it, both trades got filtered out.  In both cases, the candles closed in the wrong place to confirm the trade.

Here's the BA long.  The red first candle invalidated the one-and-done long.

The filter kept me out of a bad long

Here's the FB short.  The green first candle invalidated the one-and-done short.

The filter kept me out of what would have been a good short

Two setups.  No trades.  No gains.  No losses.

But the important takeaways:
  • I can trade multiple, concurrent setups, even something as fast as the one-and-done.
  • I can filter setups based on specific candle patterns.
  • This software lets you choose what filters and parameters you want to use.  You might not have filtered the FB candle the way I did, and you might have gotten a piece of that nice $2.82 drop in less than a minute.