The past few days have been quiet moved for my Forex Killer strategy. I tested some hypothesis I had concerning the trading setup and so changed some parameters pertaining to it. I tried to test the reliability of forex killer's signals without looking at the daily trend. I have to say, quiet disastrous results. Three trades I placed on Monday with apparently high success probability (higher than 75%) failed. This, of course, is due to the fact that the signals were generated at the pinnacle of a retracement. Apparently forex killer mistakes retracements for trends when they extend for medium (4-6 hour) periods on the hourly charts. The result is a high probability signal followed by a sharp reversal which quickly triggers stop loss orders.
One of the trades, however, was in agreement with the daily trend. So what happened ? It seems that the stop loss given by forex killer is suitable for the hourly ranges of less volatile pairs. More volatile pairs, like jpy crosses, trigger either stop loss or take profit targets five times faster than USD pairs.
As a consequence of this trades, I decided to implement a modification to my trading strategy. I will not trade jpy crosses anymore as this would require an increase in the stop loss which I am not willing to take. This also diminishes the time it takes me to analyze pairs, to about 5 minutes.
I also wanted to share with you a trade I spotted a few hours ago. This trade on the USD/JPY pair, showed high probability and coherence with the daily trend. I hope it illustrates my trading strategy better so that you can better benefit from what I have learned from forex killer.