CFDs with High Target Win Rate Strategy
- Quick Overview: Focuses on trend continuation patterns and aims to capture high payoff opportunities through retests of key support and resistance levels.
- Risk Management: Risks up to 1% of bankroll per trade to maintain low drawdown, aiming for a high win rate.
- Bankroll Requirements: Requires a bankroll of $12,000 to manage risks effectively.
Strategy Description
The strategy will look to follow the daily/weekly trend and mainly focus on looking for trend continuation patterns on the 4-hour chart. This strategy is based on the core concept “Resistance becomes new support” in an uptrend and “Old support becomes new resistance” in a downtrend. When there has been a breakout and it is retested, the strategy will consider trend continuation trades. Further filters of required confluences and reactions to levels attempt to increase the net win rate.
Bankroll Requirements
The maximum required stop losses for the strategy can be up to $120 risk (Based on standard lots of 1 CFD traded). So to maintain 1% risk per trade, a bankroll of $12,000 is required.
Percentage Risk Trade
This strategy is suited to a consistent percentage of risk in all trades. Depending on how many points are in the stop loss, the size of the position is different, but all positions should risk the same percentage. Risking 3% per trade would be considered aggressive and risking 1% per trade would be considered conservative with an aim to maintain low drawdown.
Strategy Strengths
By only looking for entries on retests of broken levels in a trend, the strategy has the ability to take only signals that have a high, theoretical, edge and also there’s a chance some of the trades can be high-paying ones. The strategy will lock in profits quickly (to maintain a high win rate) but there is also some chance of hitting big winners in strong trends.
Strategy Weaknesses
Heavily reliant on the trend. In times of ranging, the best thing this strategy will be able to do is sit out (and perhaps enter in the direction of the trend at extremes of the range) and in instances of trend reversals, this strategy is always going to have to trade at least three main levels to determine the trend has failed.
Benefits of Trading the Strategy
This type of strategy is suitable for people who do not want to put excessive time into chart reading and analysis. Most of the time, the strategy will determine a set of levels it might be interested in trading at. Set alerts at those levels and then wait. When these levels fill, is the only time anything needs to be done, and that will often just be setting a limit order.
Disadvantages of Trading the Strategy
Trades may be infrequent, and there can be periods when it’s not sensible to do anything with this strategy. Can be boring. Might wait a long time for a trade and then lose it quickly. Waiting for pullbacks might see the trend run without filling orders. Could be considered dull and frustrating at times.