Equity:981.80 - Sunday homework

Hello there, hope you are having a good weekend. My weekends are usually boring and meaningless. I guess I am still looking for the meaning of life. Anyway, I tried to do some homework to make some meaning out of it. Below is a 1 hour candlestick chart. I want to see how well the Bread N Butter performs using past data.
















This homework took me quite a bit of time and concentration, and through this exercise I also learnt some other things which I do not understand in the past. Firstly, lets look at the black circles in the above chart.

There was always a rule which I did not understand that the Micro-trend book taught for the Bread N Butter technique.

• Do not buy when the close of the signal candlestick is more than the high of the previous candlestick.
• Do not sell when the close of the signal candlestick is less than the low of the previous candlestick.

Although I don't fully understand the logic behind it, but from doing the analysis in the above chart, I realized that it avoided some of the negative trades.

Another thing I learnt is that whenever the Stochastic line crosses either 20% or 80% zone, you do not enter immediately after the candlestick. It might still dip or rise further. The entry point is after the candlestick starts reversing away the opposite direction. However, if it reverses too much, you also do not enter the trade as it will cause your Stop-loss margin to be very big.

The other circles are green and red. Green is for profitable trade, and Red is for a negative trade. There are 9 Greens and 6 Reds. Overall, it is more than profitable, considering that I set the Limit-stop 2 times that of the Stop-loss. In other words, I can lose 2 trades and and win 1, and the net profit is around zero (assuming the Stop-losses are of the same amount).

Although this is only 1 data, I hope the 1 hour candlestick charts will work more consistently with this method compared with the 5 min candlesticks. The only concern I have is to be able to be there when there is an opportunity, as weekdays I will be working. And there will also be less opportunities as compared to 5 min charts.

To solve this, I hope to learn and master 2 more techniques from the book, so that I will be able to do more different kinds of trade.

Hope you all have a good start of the week ahead!