Setup Saturday Backtesting Templates

Today I will be going over a setup that I am finding and am liking. It is a mean reversion; Low of the Day Buy Setup to take out the High of Day.

I want to trade like Mcdonald's with each setup being a cookie cutter formula. It is either there, or it isn't. I don't want to guess direction or trade movement. I want a simple setup that repeats itself regularly.

I am going over my playbook of setups and simplifying my entire process to 3-5 buys and 3-5 sells.

Today's setup is LOD Range Back to HOD:




This setup has a certain behavior it follows for each of the "sections" of the setup

1. Opening of the Daily Candle
2. Formation of the Initial High of Day
3. The Dump
4. Setting up of the Low of Day
5. The Entry
6. The Pump
7. Where to Place Stop
8. Where to Place Target
























I have given multiple examples of the same setup with minor variations and across different instruments. This is a New York setup that occurs roughly an hour or two after it NY opens. This is not something that occurs in Asia or London.






In Summary:

This is a range trade, mean reversion that takes place late in the NY session. It requires the entire day to setup and has specific parts that behave the same. Look for the initial high of day to form and the dump prior to NY. Wait until NY puts in the Low of Day and enter with small doji candles. Target the High of Day.