THE ONE
STRATEGY
ONE TIMEFRAME
ONE ENTRY TYPE
ONE PAIR
ONE GOAL
Welcome to simplicity
STARTING FRESH
The first thing I want you to do in order to successfully
learn this method of trading, is to forget everything you
know. I mean every single piece of technical analysis
you've ever been taught. Liquidity, structure, orderflow,
premium/ discount, EMA's, everything. Consider it all
useless to you.
Done? Ok good so that means you have a completely
clear mind and will be free of bad habits... Well in an
ideal world this would be true, however we are all
human and falling into bad habits is what we do best.
So consider this a warning: The hardest part of this
strategy will be forgetting everything you knew before.
Why? Because it will seem too simple, too stupidly easy
and therefore just too damn good to be true to work on
it's own, but that is the beauty of it. The simplicity is
what allows it to be truly discretion free. It's what saves
you from the psychological issues that plague most
other strategies. So let's dive in.
THE ONE TIMEFRAME
A major part of the simplicity of this strategy is that it
only focuses on one timeframe. That means no multitimeframe analysis, no confusing conflicts & no worrying
about what happened 5 years ago.
The only timeframe we will be studying is the 15 minute,
and only the most recent price action, looking left is a
thing of the past, we don't care about the past, only the
present.
The benefits of this are huge, first of all it makes things
incredibly simple, you can open a chart and know
within seconds what you are looking for. Secondly it
means you don't need an expensive Tradingview
premium account in order to analyse the markets, I
mean, really you don't need Tradingview at all, it's
simple enough that you could follow the candles purely
on your MT4/MT5/Ctrader/whatever account. I
personally still use Tradingview to backtest & out of
habit (also because I paid for premium and I'll damn
well use it until it runs out!).
A NEW KIND OF STRUCTURE
You may be confused when I say structure, didn't I tell
you before to forget structure? Well yes I did but that's
because this isn't structure as you previously knew it,
this is structure in it's simplest form, and it requires
following the lows and highs of candles in a very
mechanical way.
We will only ever need to follow one low and one high
in price and that is the Current Confirmed Low and the
Current Confirmed High. The simple rule is that a low is
confirmed as soon as a candle trades above a candle to
it's left and a high is confirmed once a candle trades
below a candle to it's left. It doesn't need to close
above/below the candle to it's left, it can just be a wick.
This may sound confusing in just words so on the next
page I will explain with images.
FOLLOWING HIGHS & LOWS
Here you can see a series of candles. within these
candles there are a multitude of highs and lows that
formed as price progressed. in the next image you can
see how we would follow price using the previously
mentioned "structure".
EXPECTING RESPECT
The theory behind why we look at price this way is that
we are expecting bearish price to respect the high of
the previous candle. Once the high of the previous
candle is disrespected, we can confirm that we have
had a sufficient enough movement to confirm a valid
low. The same goes for bullish price, we expect the low
of the candle to the left to be respected, and in the
same way, if it is not, the we have sufficient movement
to confirm a valid low.
PRACTISING STRUCTURE
First things first get the 15m charts up and create 2
horizontal rays. These will be your current low and
current high. Now use Bar Replay to take price back as
far as you like. Now you must locate your current
confirmed high and low.
For example see the image below:
This is price at 17:45 (UK Time) on the 8th June 2023. Can
you see where the current confirmed high and low
would be? The answer will be on the following page. But
try and work it out yourself before skipping ahead.
Answer:
If you got the same results, congratulations. If you didn't
that's ok too. To find the current confirmed highs and
lows all we need to do is start from the current candle
and work backwards to the last time highs or lows were
disrespected. Now let's move forward a few candles.
Now we have broken the current confirmed low. do we
now have a new confirmed low?
No we do not, a new low is only confirmed once a
previous candles high is disrespected. Such as a couple
candles later in the image below:
Now we have a new current confirmed low. It's also
important to know, we don't need a break of the
previous current confirmed low or high, in order to
create a new one. As you can see on the following page,
just a few candles later, we have created a new high
without breaking the previous currently confirmed low
or high.
And then again, we have a new confirmed low here
after price disrespected a low and then disrespected a
high immediately after:
Hopefully now you are getting the hang of it. It is very
simple it just requires a little practise to get
comfortable.
ENTERING TRADES
Believe it or not, the hard part is over with, once you
have the structured sussed, you are 90% of the way
there. The one simple way we enter trades with this
strategy is to wait for a break and close above a current
confirmed high for a long or below a current confirmed
low for a short.
Once price closes on the 15m and this one criteria is
met, we enter at the closing price of last 15m candle. As
shown below. Side note: If price only wicks above or
below, you must wait for price to close below or above
the candle to it's left before entering.
STOP ORDERS
The easiest and most foolproof way to enter using this
strategy would be to just market execute at the close of
a valid 15 minute candle. However from my backtesting
I have found that a significant enough number of losses
can be avoided by using stop orders for your entries
instead.
This requires waiting for price to pull back inside the
previous candle body before placeing the stop order at
the close of the previous candle. This way you will only
be tagged in if price goes through your entry. If it
continues to pull back and disrespects the high/low of
the previous candle, you can remove the order.
The only downside with this is that there will be times
that you miss trades due to them not pulling back at all.
The stop order entry doesn't require price to pull back a
specific number of pips, it just requires it to pull back at
all.
RISK MANAGEMENT
In terms of the technical analysis part of the strategy, we
are done. Finished. Nothing else is required to know! But
the analysis is not the most important part of this
strategy, this is where risk management comes in.
Now I have only thoroughly tested this on Gold
(XAUUSD). It does work on other pairs (Such as GBPJPY)
from a small amount of testing I've done, but I would
recommend at least starting with just Gold and testing
it for yourself.
Now I can't tell you exactly how to trade it I can only tell
you how I do, from what I've tested so on the following
pages I will give you the simple rules I use to enter &
manage my trades. However I encourage you to
backtest this thoroughly to come to your own
conclusions on what works best for YOU.
STOP LOSS & RISK %
The Stop Loss (SL) I use for this strategy on Gold is 27
pips. Now when I say 27 pips, on Tradingview this would
be the equivalent of "2700" on the Risk Reward tool for
Gold. Or in other words if I entered short at 1965.215, the
SL would be at 1967.915.
I risk 1% per trade and target 24 pips. So a maximum of
0.89% profit per trade. This sounds insane right? A lower
Reward than the risk? Goes against probably everything
you’ve ever been taught about trading!
The proof is in the pudding though. With my
backtesting this 27/24 ratio gives around a 67% winrate.
The numbers do not lie and with the right risk
management strategy, it is possible to make over 100%
profit in a year using this strategy and Risk to Reward.
Double Risk Strategy
A fantastic way to both increase your profits and
decrease your maximum drawdown, is to double your
risk when in a certain amount of profit, and to halve it
when you get to a certain drawdown value.
From my data, mathematically it has been shown that
you should double risk when above 2% profit, and halve
risk when below 3%.
For example, with a $100,000 account, I’d be risking
$1000 (1%) per trade to begin with. As soon as the
balance reached $102,000 I would start to risk $2000
(2%) per trade. If the balance fell below $102,000 again,
I would go back down to $1000 risk. If the balance fell
below $97,000 (-3%) I would start risking just $500
(0.5%) per trade until it was above $97,000 again.
MOVING STOP LOSS
When I first started using the one strategy, I was using a
much smaller stop loss on gold. This increased the
profits I would make from each trade and meant I
would need a smaller winrate, however it did mean that
there was way less margin for error as well as there
being longer losing streaks and higher drawdown
periods.
Using the smaller SL psychologically, felt like I had a lot
less room to breathe, and thus also I would cut my
trades short by trailing the stop loss.
Since using a bigger stop loss, I have found it to be
much more relaxing psychology wise, as well as giving
you that larger margin for error where spread plays a
much smaller factor, and commissions are lower on the
brokers that have them.
The only thing I will do, is move the stop loss to
breakeven as soon as the trade runs to 15 pips in profit.
Purely from a data perspective, this has shown to be an
effective addition to the risk management strategy.
BACKTESTING
Backtesting is a very important part of this strategy.
Using just a single TF makes it very easy to backtest a
large amount of data in a small amount of time. This
means you can really put the work in to gaining a large
sample size of data and refining the edge to your liking!
This is what makes trading completely mathematical
and you will finally know your winrate and how many
losses you can expect to take in a row. This is how to
actually beat emotions and the psychological game of
trading.
THE MAGICFX TRADING LAB
In order to start backtesting properly you need a way to
log your data, I have included a spreadsheet below for
you to use to fill in your data.
Access it here and make a copy: Backtesting Journal
This is the next gen version of the MagicFX trading
Journal and is incredibly powerful. To use it you must
enter the date, time, Drawdown 1 (number of pips the
trade went against you before going into profit), Profit 1
(The number of pips the trade went into profit before
coming back to the entry price) drawdown 2 (number
of pips the trade went against you after coming back to
the entry price) Profit 2 (Number of pips the trade went
into profit (If it went higher than profit 1 again).
When I logged my data, I used 100 pips as a maximum
drawdown, so if it went past that I would just log it as
100 as I wouldn’t use a SL bigger than that.
PLEASE NOTE: The journal is still in a beta phase for the
moment so not all features may work as intended. I am
constantly refining it to make it the best and most
accurate trading journal in the world. It will be
automatically updated through the link in this book.
The functionality of the journal is unparalleled and once
you have logged a lot of data, you can easily experiment
with different stop loss sizes, withdrawal amounts,
commissions, spreads, number of trades per day
amongst other features.
But you MUST log a serious amount of data (1 year+) for
it to be valuable.
UPDATES
NOVEMBER 2023
NY SESSION UPDATE
A lot of people have been telling me for ages that the
NY session works way better for XAU/USD, I somewhat
stubbornly refused to accept this as I was happy with
my London results, however I was recently approached
with undeniable evidence not only performs well during
NY but also performs better than London. This is using
the following parameters:
For the New York session, data has found that trading
the NY session with the following parameters is ideal:
Trading from 14:15 to 16:15 (UK time) is most
profitable.
The ideal Stop Loss is 27 pips, with a Take Profit of 29
pips.
Avoid high impact news as shown on myfxbook
economic calendar. (Don’t trade the candle directly
before or during the news, after is fine.
INSIDE BAR UPDATE
After some serious testing, MagicFX member AVIX, has
discovered that it is profitable to use inside bar (ib)
breaks for entries in certain circumstances. I have
assessed his data and come to the same agreement.
Therefore we can now include this in the official guide. I
will explain below.
Note: If you are unsure of what an inside bar is, use the ibsv2 indicator on Tradingview and it will
outline them for you. In short, it’s a candle that stays inside the candle to it’s left (neither breaks
the high or low of it).
INSIDE BAR STRUCTURE
The first point to make is that we don’t use every inside
bar that we come across for a confirmed high or low.
The idea of using inside bars is to be able to get involved
in trending price when it is moving with momentum.
This will be most useful in the NY session when we get
those big fundamental pushes. As the London session
can be more rangey, the IB entry is more of a n optional
add on.
In order to differentiate one inside bar from another and
to confirm trending price we must have at least 2
candles in a row that break the candle to their left in the
same direction. After this occurs we can confirm the
trend and start using the Inside Bar structure. Please see
the image below:
In the above image, we can see that we have had at
least 2 candles in a row that have traded we would now
treat the high of the candle before the inside bar as the
confirmed high. Once the high of the IB is taken, the low
of the IB is also confirmed. So if either the current
confirmed low or high is closed below/above, then we
can take trades as usual.
So if taking the above example we would have:
VALID IB CONTINUATION:
VALID IB REVERSAL:
So those examples are for a bullish trend and obviously
the reverse would be true for a bearish trend with short
continuations and long reversals. The important part is
that in order to use the IB structure we must have those
2 breaks in the same direction beforehand (either wick
or body).
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