Transcription
This 1-hour pattern has made trading so simple for me. I know exactly when to trade and which direction to trade in. And since backtesting this 1-hour pattern, I have turned a $100 account into $747,000 in the space of 4 months. And in this video, I'm going to show you exactly what I'm looking for on the 1-hour chart and then how to take a trade based on that pattern. So without further ado, let's just get straight into it.
So this is the hourly chart here on Great British Pound US Dollar. And what I want you to look at is how often one candle closes in one direction and then the following candle also closes in that same direction. So this is exactly what I'm looking for when I'm trading. I am a continuation trader. So what I'm looking for is an hourly candle to close bullish or bearish and then from there I am taking a trade expecting price to go in the same direction. So look at all these bearish candles for instance. I could have been taking sells during that time. All of these bullish candles, bearish. It happens a lot of the time. Obviously, this does happen better when markets are trending. However, I will show you a pattern on the one-minute chart that will help avoid getting to bad trades.
Now, the reason I like trading this way is because it is so simple. We don't have to be looking for ICT patterns or any of that madness. All we're looking for is how the previous hourly candle has closed. And that is trading at a very basic level. We can clearly see how an hourly candle has closed. And once we've got that, we can then start looking for trades. Now I like things being very, very simple. I am a beginner trader. So at this point in my trading career, I do struggle with over-complication and a lot of the strategies on YouTube, I just couldn't get my head around because I like things very, very simple.
So let's have a look at some of these candles. Then Wednesday the 20th of August, 1 till 2, we have closed bearish. So you can see there, price has opened at that point at 1:00 and then has closed there at 2:00. So it's closed lower than it has opened. Therefore, it is a bearish candle. Price opens there, closes there, bearish candle. After that, I will be looking for sells. So, when we're on the new hourly candle, which is the 2 till 3, obviously, the previous hourly candle was the 1 till 2. We're then on 2 till 3, I will be looking for sells. We close bearish there as well. So, after the 2 till 3, I will be looking for sells on the 3 till 4. Another bearish close. And like I say, this doesn't happen all the time. So after we've closed bearish and 3 till 4, the four to five candle actually closes bullish. So price opens there, closes there. Candle after that, the 5 till 6 is also bullish. 6 till 7 is also bullish. And that is literally the 1-hour pattern, bullish or bearish, based on the previous hourly candle. Ow.
Now obviously, we can't just buy and sell just because of how the candle has closed. I actually look at the one minute for my entries because there's a certain pattern on the one-minute chart and when we see that pattern, we are able to get into trades. So looking here on TradeZella, which is the platform I use to backtest. The link is in the description. At the minute, I only trade on Great British Pound US Dollar. So that is what we are looking at here. On the left-hand side of the window is the 1-hour chart and then on the right-hand side is the 1-minute. And by having this split-screen view, I can see exactly what's happening on the hourly chart as well as the 1-minute.
So if we look here from 11 to 12, we have clearly closed bearish. So price has opened there, pushed down and closed there. So because of that, we are looking for sells. So because of this hourly pattern, I know exactly what I'm looking out for on the 1-minute. So it just gives us that clear directional bias, which just helps me take trades. 11 to 12, bearish candle. We're now on the 12 to 1 candle. So even though we are expecting price to go down, price does trend a lot on the 1-minute chart. And we can see from 12:21, price has been pushing up. So if we just play this forward a little bit more, you can clearly see that we have been making higher highs and higher lows. Let's go down to the line chart to hopefully illustrate the point even more. So 12:20, we made the lowest point. We have then been making higher highs and higher lows. So there's a higher high, there's a higher low, there's a new higher high, and we've come down and created a new higher low. So as it stands, we're actually bullish on the one-minute chart. However, like I say, we can only look for sells because of the previous hourly candle.
So, here's the lowest point. Here's a new higher high. Here's a new higher low. Another higher high. Now, obviously, when we're on an uptrend, we're expecting price to come down, make a new higher low, which it's done there, and then break past the previous higher high because we are on an uptrend. And when price is in an uptrend, it makes higher highs and higher lows and continues in that direction. However, like I say, we are looking to sell because of the previous hourly candle. So, what we're looking for is the first sign of the bullish momentum depleting. So, like I say, we are clearly bullish on the 1-minute chart. Higher highs and higher lows. Now, sometimes what's going to happen is price is going to make a new higher high. It's going to make a higher low and it's just going to continue upwards. In that case, there is no trading opportunity.
Now, while backtesting, I've been trading from 6:00 AM all the way up until 4:00 PM. Which means that even though not every hourly candle is going to give us an opportunity, there's a good chance that we're going to get in a trade that day, at least one, just because from what I've backtested so far, there tends to be at least one trading opportunity a day. Now, you may not be someone who likes getting into multiple trades, and I completely understand that. However, for myself, at this point in my trading journey, I do want to be getting into some trades because I want to learn from each trade. Like I say, I'm a beginner trader. So the more data I can gather, the more I can practice and get exposure wherever I can, it'll just help build myself into a better trader.
So in order for us to get into a trade, the current hourly candle that we are trading has to be in line with our directional bias. So it has to be in line with how the previous hourly candle has closed. Which means that if price does break this high and continues upwards, even if we do get a lower high pattern here, we can't take this trade because if we look on the hourly chart all the way up here, we would be bullish on the current hourly candle. We have to be bearish. We have to be in our direction. So, if we're buying based off how the previous hourly candle has closed, we have to be bullish on the current hourly candle. And if we are selling, the current hourly candle has to be bearish. So, if we look here after this bullish trend, we are still bearish on the current hourly candle, which is a good sign for us. It means that potentially bears are still in charge of this candle and price may go down. So, we're just looking for an entry pattern on the 1-minute.
So, after this higher low, we're expecting price to continue upwards. Now, once we see that price doesn't continue upwards and may not break that previous high, we are in a position to look for a sell. We have to look for sells because of how the previous hourly candle has closed. Price looks like it's depleting its bullish pressure because we haven't broken that previous high. So, if we play this forward a couple more candles, we can see that price really is struggling to continue upwards. If we go down to the line chart, here's the low. Here's the lower high. Price is struggling to continue upwards. It's now created a lower high. So, what we'd be looking for is a low to be broken. So, the theory behind the trade is we are selling because of how the previous hourly candle has closed. We are currently bearish on the current hourly candle. Price has been making higher highs and higher lows. It's then failed to make a higher high and is now shifting bearish. So after we see this bearish momentum stepping into the market, we are looking for a low to be broken in order to be triggered into a trade because if price isn't going to continue upwards and then breaks a low, potentially it may continue in our direction.
Now at this point, you can put a sell stop order below this low or you can just use a market execution because you will be watching price action anyway because we are scalping on the 1-minute chart. So here on TradeZella, we can go to advanced order. We can do 1%. Now TradeZella just uses the long or short position that you've drawn onto the charts to automatically put the trade in. So we don't have to put our own take-profit and stop loss in. It'll automatically do that based on the short or long position order that we've drawn on the charts. We can also use auto break-even to go to a 1.5 because I always go for a 1-to-2 risk-to-reward, stop loss at break-even at 1.5. So I know that we get triggered into this one. I use this trade just because it's a really clear example. So triggered in and then if we go down to 1.5, which I know we do, you can see our stop loss automatically goes to break-even. So we don't have to go through doing that every single time. Price has then broken that low that we were looking for and then continues down for 1-to-2. So the theory behind the trade was previous hourly candle bearish. Current hourly candle bearish when we took the trade on the 1-minute chart. Prices made higher highs and higher lows. It's then failed to break this previous high, shifted, made a lower high, broken the previous low and then continued down.
So then we just keep moving forward and we can see that the 12 to 1 candle also closed bearish, which means that the new hourly candle, we have to be looking for sells. So again, we will just be looking for the same pattern. We'll be looking for price to make higher highs and higher lows, which is currently doing. You can see that we are bullish on the hourly candle that we are trading. So even if we get that lower high shift, we wouldn't be able to take this trade yet. We need to be bearish on the current hourly candle. So we're just looking for a trading opportunity here. So let's just keep playing it through.
Okay, so price now has made a new lower high. So like I say, it started pushing bullish just like the previous hourly candle. It's then failed to continue bullish. We are also bearish on the current hourly candle. So let's go down to the line chart. Higher highs and higher lows. We then made the highest point of the current hourly candle. This is the higher low. Gets a little bit messy here, but we can see it. Especially if we go down to the line chart, we can see higher highs, higher lows. There's the new higher high. So, you can see that we've clearly closed with a body higher than the previous high. There's the previous higher high. We expect the new higher low and then price to continue upwards, but we didn't get that. We then came down here to make a new lower low, violating the previous low, which means the previous low was not respected. So, potentially sellers are coming into the market to push price through that previous low. We've then come up and made a new lower high. I'd consider this a lower high, especially if you go down to the line chart. You can see that there. There's the lower high. There's the previous low. So, we're looking for that to be broken. So, once this previous low is broken, we can look for a sell position. We'd always put our stop loss above the previous high, including the wick. So, we just click sell here on TradeZella. It'll put a sell stop order in, meaning if we break below this level, we are triggered into the trade. We continue down. Stop loss then goes to break-even. And then we do continue down and we hit another 1-to-2.
Okay. So, let's have a look at another example. This the next day at 5:00 AM. You can see that we have closed bearish. So we have to be looking for sells from a 1-minute perspective. We are creating the same pattern. So we are making higher highs and higher lows. Some of that price action happened during the previous hourly candle. So the five till six. That's what this bottom wick is. So all we are looking for now is a shift. Here's a higher low. Here's a higher high. Price then actually made a new lower low, which shows that there is that shift. So let's go to the line chart here to illustrate this a little bit better. There's the low. There's the new higher high. We then made a new higher low. And if we zoom in here, we can see that we actually made a new lower high all the way up here. So, after we've made these higher highs and higher lows, we're looking for that shift where price can't violate the new higher high. So, there is the shift. We've now made a lower low and then a lower high. It just shows that there's bearish momentum stepping into the markets. So, we would look for this low to be violated. We are bearish on a current hourly candle that we are trading. You can see that there. So we put a sell stop below this low. So if price goes below there, we'll be triggered into the trade, which you can see we do get triggered in and then we do hit 1-to-2 on that one as well.
Now, so far, we've only really been taking sells because we are bearish overall on GU. If we were only looking for sells based on the trend of the hourly chart, which you can clearly see is down overall, we would have missed a potential buy opportunity after this bullish candle. So the overall trend on the hourly chart doesn't matter to me. I only focus on the previous hourly candle. Now, we are in a downtrend overall on the hourly chart, which does make sense why we're getting into more sells. However, the only reason I'm getting into these sells is because of the all of the bearish candles on the hourly chart. So, the overall trend doesn't matter, but because we've been closing bearish so often, I've been taking more sells. So, let's skip forward until hopefully we can get a buy.
Okay, so here's a buy opportunity here. So, what you can do on TradeZella is you can go on to sync timeframe. So whichever timeframe you're on is how quickly it'll skip through. So on the hourly chart, we can just skip through hourly candles really quickly. But as soon as we're on the 1-minute chart, which we are here, we can just skip through 1-minute candles. So with closed bearish from 9 till 10, you can see that there, price opened there at 9:00. 10:00 has closed there. We actually tried pushing up a little bit further, but we didn't have the momentum. So we left this wick behind and then price come down here and closed. And during the previous hourly candle, I'd say we're more bullish on the 1-minute chart. So, we're just looking for price to push down, which we have got there. Now, I would consider this a bearish trend. It's maybe not quite as clear as the previous ones, but if you look here on the line chart, we see we made this high, then come down and made a new lower low, then come down and made this low, made a lower high, and then a lower low. So, I would consider this from 9:54 to 10:03 a bearish trend. And that's how quick the 1-minute moves. We get into trends in three or four minutes and it gives us opportunity to take trades. And what we want to see is if price can't break this low and we have that shift, which it looks like we're already going to get here to here, where price isn't going to break this low. It's made a lower high. It's then tried to push down, left this wick, and we can be looking for a buy position from here. Buy if we break that high, which we do, triggered into that trade. Price pushes up and wanted. The reason behind that one is we made this high here. We then failed to break that high. We came down, we made a lower high here, a lower low. So price is bearish. We've been making lower lows and lower highs. We've then shifted from there to there. Made a new higher low, broken the previous high. Obviously, because we are buying, we have to be bullish at the time of our entry, which we were. If we look on the hourly chart here where we got triggered into the trade, we were bullish on this hourly candle. Triggered into that one and another 1-to-2.
Now, potentially that wasn't the clearest example. So, let's see if we can get into another buy here. So, potentially we're going to close bullish after this candle. So, let's see. Chances are we're going to close bullish. So, we did. So, you can see there. So, 2 till 3 candle is bullish. We are in a downtrend here on the hourly chart. So, we're just looking for price to fail to continue in that direction. So, there's a new lower low. Let's see what we can do here. So this for me, even though again, this isn't the clearest, but this is already a shift for me. So lower lows and lower highs. We've then failed to break this low. So this is the shift from here to here. Let's go to the line chart. Hopefully, it's a lot clearer here on the line chart. So lower lows and lower highs. And there's that higher low formation. It's really quite clear on the line chart. So there's a lower low. There's a lower high. Failure to break this low. So we've made a higher low. We're currently bearish on the hourly candle that we are trading, which is here.
Now, with the stop loss, I'm always using whole or half numbers. And I also use a minimum of two pips and a maximum of 10. So, stop loss can either be 2, 2.5, 3, 3.5, 4, 4.5, 5, 5.5. You get it? All the way up to 10. So, in this case, I'm going to go for a 7.5 because this is including that wick. Always going for a 1-to-2 stop loss to break-even at 1.5. Buy orders in there because we're making lower lows and lower highs. We've then shifted, failed to break this low. We're bullish on the current hourly candle. Buy stop. If we get triggered in there, but more likely I will be using market executions because the 1-minute moves really quickly. So, let's see if we get triggered in and if we do, what happens? We do get triggered in. Price is now making higher highs and higher lows. We're now break-even and then we came down and we ended up break-even. That's okay. That's going to happen a lot.
If we look at our win rate, we are at 53.57%. So obviously, we are going to lose a lot of trades. We are going to be break-even a lot of the time as well. But overall, we can see that so far this has been a profitable strategy. Now the reason we've made so much profit but we're only winning 53.57% of the time is because we always go for that 1-to-2. That is crucial for this strategy because we're going to be wrong so often. Our edge is on our risk-to-reward. So if we look at the breakdown month by month, we started in January with $100. We were risking 5% per trade. I have brought that down to 1% now. But on TradeZella, we can only go back to, I think it was the 14th of January, which means that we only had chance to take 73 trades. We made $165 on our $100. Then obviously, as the account grows, the risk and reward does too. So then in February, we took 118 trades and we made $2,000. So we made $87,000 in March. And then like I say, 5% of that account balance because we were using 5% of the current balance, not the initial, which means that there's more money at stake in each trade. We then made $236,000 in April and then in May, we made $423,000.
Now, obviously, this is backtested simulated settings. So to be able to grow the account so much on live markets would be a lot harder because of things like spreads, commissions, as well as that your emotions get involved. So whether I could grow the account this much on live markets, we'll have to see because I am going to be opening a live account very soon where I'm going to try and replicate this. Let's see. Let's not be negative about it. Let's just try and get it done. But obviously, I do understand that there's a big difference between backtesting and live markets. But ultimately, we have been trading this strategy and we have been able to grow the account by taking these trades every single time we set up. Which means that provided my emotions don't get involved, why can't we at least be profitable? Whether it'll be this profitable, I don't know. But why can't we just be profitable? If we've backtested this strategy, we can see that so far it's been working. I mean, I have only done five months. I do plan on backtesting this strategy for as long as it can. But we can see that we've been this profitable over that amount of time. So, I'm hoping we can continue this way as well.
So, if we go on to reports, we can break all of this down. We've taken 599 trades now, 285 won, and 247 lost with 67 being break-even. Average hold time of the trades is just 20 minutes. So, I like the fact that we are in and out of trades because for me personally, I have tried swing trading as well. And I just find that I'm more likely to get my emotions involved in swing trading, believe it or not. You think that when you're scalping and things are a lot quicker that you're more likely to do stupid stuff, but not necessarily for me. When I was holding trades and maybe I was sat in some profit for a while, then I saw news events coming up or price maybe not breaking through an area, I'm more likely to close the trade at that point as opposed to being in and out in 20 minutes. There is no trade management apart from stop loss to break-even at 1.5. The rest of the time, I just let the trade play out because I'm only holding it for on average 20 minutes. So, there's not really any time to manage trades. It's so much easier to just trade this way for me.
Now, one thing I like to see on TradeZella is the Zella score because this will give you a breakdown of your performance of trading. So, consistency, profit factor, wins, losses, and it really just shows how consistent you are as a trader, which is absolutely key, especially when I'm going through losing streaks. I need to stay consistent. Our max consecutive losses is seven. Seven times in a row we've been wrong and taking losing trades. Now, the reason I like backtesting is because it helps me know that there will be times where I'm taking seven losses in a row, maybe even more on a live market and over time, we are still profitable with this strategy. That is the reason I like backtesting and like I say, I will be doing a lot more of it as well as opening a live account at the end of this month, which I will keep everyone updated on. Hopefully, that all made sense. I am trying to explain the strategy better in every single video. But if you do have any questions at all, please let me know in the comments.