Backtesting helps

Backtesting. Good morning Forex day traders, our second entry for the morning GBP/USD 5-minute chart, 8.15 am 21st February 2018.

We are trending short, and we are looking to take the third push down, as shown in the chart below. For this trade we have scaled-in. We have a first limit entry marked by the lower green arrow, and the higher green arrow shows our pullback midpoint second limit entry.

We are looking for the pullback not to close above the yellow corridor that we have marked. Our stop is in the vicinity of the blue circle. The measurement of the amount traded per pip, however, is taken from the very top of the day at price 14,000, some 33 pips distant.

Our entries are successful. And as we are on a third push, we have a target at the scalp position of 18 pips and 24 pips respectively.

Notice that even with both entries our overall acceptable risk remains consistent. Therefore, if we are to scale-in, this needs to be considered from our initial entry. Where to scale-in comes from relentless backtesting.