The next part of creating a trading plan involves the most important table on the web site. That table is the Maximum Adverse Excursion table.

 

total winning tRADES Mae = 0 MaE 1-3 MaE 4-5 MAE = >6 2755 TREND 1533 / 55.6% 889 / 32.2% 232 / 8.4% 101 / 3.6% 1836 COUNTERTREND 921 / 50.1% 686 / 37.3% 164 / 8.9% 65 / 3.5% 4591 total 2454 / 53.4% 1575 / 34.3% 307 / 8.6% 39 / 3.6%

There are 2 important statistics in this chart that will directly affect your trading of this system. The first is the MAE = 0. MAE = 0 simply means that a winning trade had zero adverse excursion. Adverse Excursion is the number of ticks the trade went against you from the fixed entry window. Most trades have a small 1-2 tick entry window. So that means if you entered a normal trend trade, the system says you have a 50.1% chance that the counter trend trade that will follow will have no adverse excursion. If you believe the counter trend trade will be a typical trade, why would you plan to place any profit target at or below the light blue trend support/resistance zone?

 

What have you just done? You have started to create a plan.

There other statistic that is important is when the MAE goes against you. Out of 4591 winning trades, only 307 or 8.6% turned into a winner if the MAE went 4-5. That number drops to 3.6% if the MAE goes to 6. If you have only a 8% chance to have a winning trade, you can make the decision to move your profit target to breakeven and wash the trade. Also realize that these numbers are for all winning trades. If you have removed the suggested news / market close trades, this number will be different. You need to analyze the new numbers.

 

Now study the Excel worksheets (with the news and end of day trades removed) and create plans for each type of trade. You need to answer the following questions

1. Develop profit targets or a profit strategy.
2. Develop a breakeven strategy if the trade goes 4-5 ticks in your direction and reverses. About 11% of all trades go 4-5 ticks in the direction of the trade from the fixed entry point, then reverse.
3. Develop a breakeven strategy if the trade goes 4-6 or more ticks against the fixed entry point.
4. Develop a stop strategy.

Note: Determining the fixed entry point is detailed in the manual. Study this. The fixed entry point is going to be different from where you entered the market. Where you entered the market is irrelevant. The market responds to the Zones and this is why you measure the reaction based on the Zones.

The remainder of the questions you need to answer are located on the Advanced Video Training page.

 

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