I quite like the approach you suggest, but I do have a few concerns about the strategy.
LOL, you better! That's the point of this exercise.
The direction of the monthly bar has no statistical significance on the outcome of a trade on a 1 minute chart utilising a 5 pip stop (and if this where a trading site rather than a zoo, I'd happily post the research that proves this)
Oh, you better believe it does. Why? Because hidden inside of each "bar," is that bar's Volatility Footprint, which is composed of five (5) distinct vegas - or five distinct volatility dimensions. This is why being able to think outside the box to arrive at derivatives for price, is so important. However, this is way beyond the scope of this thread and I don't want to start confusing the Newbies with talk of Distinct Vega in Five Dimensions to map the Footprint of a bar. We just don't need to go that far, here.
Suffice it to say that there's more to a bar of data than meets the eye. Just know that each bar as five (5) distinct dimensions that yield its footprint. I have an indicator that maps this footprint and it tells me the statistical probability for a certain degree of price action within each dimension of the footprint.
I'd argue that determining which trend(s) you are trying to exploit is a key stage in strategy development, suggesting the monthly chart has any sort of bearing is misleading.
When you learn more, you'll understand more. For now, try to be the student working his way through training. Clearly, you did not know about Distinct Vega within each bar of data, nor did you know that there were five (5) dimensions of price action within each bar of data, so try to visualize that concept before casting dispersions about something being misleading, when you really don't have enough knowledge about the subject to make such a declaration.
Whilst I advocate the use of MAE/MFE, surely a lagging entry signal based on lagging MA's coupled with a 5 pip hard stop kind of invalidates any meaningful MAE analysis.
If the point was to make every trade a success, yes. But, the point here is to teach a principle and a concept, from which a new trader can more quickly understand the necessity to get their head out of the box of convention. I believe I've also included additional statements about the 5 pip Stop level, that should make it clear that it is there for a different purpose for now and it will get modified as more is understood by the Newbie.
I'd be more inclined for training purposes to use a larger stop, or no stop at all and a time based exit.
You are free to use whatever stop you want to use. However, if the point is lost, I'd appreciate you allowing the others who did use the correct stop for the assignment to move on without hindering them with additional questions that would have been answered, had the 5 pip stop been used at the outset.
At anytime, if you have a better way of teaching this material, then by all means, go for it!
If you really want to get any meningful MAE/MFE data you need to take away arbitary constraints that are influencing the outcome.
There are no constraints on the MFE (read the exit logic for each trade above). The MAE is constrained for a purpose that will be revealed later. Re-read the post - especially that portion that indicates this exercise to have a psychological component as well as a skills development component.
Thanks for posting. I'll see you guys tomorrow.
