Observation Journal

Trying to develop a system for fun. I'll be testing a few indicators for filtering.

This is a pullback scalping system where I place a limit order at the EMA 20 after setup arrows appear. The arrows are generated from M15 QQE. I had AI modify the indicator to plot an arrow whenever the QQE trend line (green line) moves up or down by 2 points to signify momentum.

The RR is 1:1 or 1:2, with SL set to 2x ATR(15). There is also an option to flip the trade with a 1:1 RR if the SL gets hit, as most losses occur when trading at the very end of a wave.

I only trade XAUUSD.
The picture is, of course, cherry-picked to show the system's mechanics. Once an arrow appears, a limit order is placed directly at the EMA 20. As shown in the image, there are two losses, but both are recovered quickly.

Since the arrows are generated from QQE filtering, they tend to appear slightly late—often in the middle or near the end of a wave—making some losses unavoidable. However, these losses can be quickly recovered if there's enough momentum, as MMs often create a spring or fakeout before initiating an expansive move.

In this example, there was enough room for a flip trade with better than a 1:1 RR, but the market was merely seeking a better price before dumping lower. This is a condition that must be taken into account whenever planning flip trade's RR.

Edit: I made a mistake with the template. Please redownload it, or simply change the RSI period to 13.
P.S. The newest template is always attached to the latest post. Required indicators can be found in the 1st post and alongside any new template update.

I put a bunch of indicators on the chart (all available here on Forex Station.)
The 1st setup had a deep retracement. If we used the ATR from when price touched the EMA as the SL (~550), it would’ve ended in a loss. But if we used the ATR from when the arrow appeared (~670), it would’ve been safe. Price then moved up around 1,300 pips (points), so a 1:2 RR was achievable. In sub-window 1, the ddz Ehler Fisher Transform (13) showed divergence, which could have been used as an early warning for the deep retracement. The Averages rainbow heatmap (default) in sub-window 2 and Koncorde (default) were also in agreement, confirming the momentary momentum change.

The 2nd setup was a loss (SL ~570), but could’ve been recovered quickly with a flip trade since the down move was around 2,500 pips. There was no divergence warning in sub-window 1, but Kiosotto (default) had spiked, warning us of a reversal.
The 3rd setup was a loss (SL ~800), but could’ve been recovered quickly with a flip trade since the up move was around 2,500 pips from the EMA. Both the divergence warning and Kiosotto spike were present, so instead of placing a limit order, we could’ve set a buy stop to catch the momentum.
The 4th and 5th setups were good (though a bit high risk)—the 4th setup could net a 1:2 RR, while the 5th got 1:1. The 6th setup was clearly a loss from the get-go due to both the Kiosotto spike and the EFT divergence.
The 7th setup was good (1:2 RR), though the heatmap and Koncorde might have shaken my confidence a bit. The 8th was a loss (SL ~330), but could’ve been recovered quickly since the down move was around 660 pips.
I knew this setup was going to fail (divergence and Kiosotto spike), so the better choice would've been to place a buy stop. But even if I took the limit order and lost (SL ~450), I could've flipped the trade since the up move was around 950 pips. Notice that price bounced off the M15 EMA20, meaning that this was a higher TF setup.
This was a painful setup to watch. 1st scenario: I noticed the divergence and spike, placed a buy stop with a 1:1 ratio, and watched my floating profit drop from ~700 pips to -700 pips before it finally reached TP (~820 pips).

2nd scenario: I stuck with placing a sell limit and watched the trade go from a ~-700 pip drawdown into a +700 pip floating profit, only to reverse completely and hit SL. The flip trade failed because the momentum was gone, and the 4431.50 area turned into a consolidation zone. However, price eventually reached the flip trade's TP (~4440.00).
The 11th setup was a no-go since price didn't touch the EMA on the pullback. Side note: On impulsive moves, we could switch to an LWMA to catch the retracement. The 12th setup was another textbook flip trade (backed by divergence and a spike) for a 1:1 RR.

1st setup: divergence and spike, flipped trade for a 1:1 RR (385 pips). Enough room for 1:2 if you can stomach the drawdown.
2nd setup: divergence and spike, flipped trade for a 1:1 RR (416 pips). Not enough room for 1:2.
3rd setup: divergence and spike, flipped trade for a 1:1 RR (511 pips).
Not much to do after the drop during the Tokyo close/London open overlap. Added the Averages rainbow heatmap with level 7 as a threshold to gauge whether a flip trade is viable or not.
4th setup: There was a divergence and a spike, but heatmap was below level 7. Okay to sell for a 1:1 RR, but I don't think there was enough time to place the order.
5th setup: There was a spike, but heatmap was still below 7. Good to sell for a 1:1 RR, with plenty of time to place the order.
6th setup: There was a spike and heatmap began to pierce level 7, but it was crisscrossing. High risk—stay away.
7th setup: Late setup. Ignored.