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Today I want to talk about science. Not really, I don’t know anything about science. I do want to talk to you about low volatility and high volatility.
I just built a robot this morning or the specifications for a robot that is gonna use low volatility and high volatility and I want to share with you how that’s made and then maybe next week we could give that robot away to those of you that are watching on the YouTube channel, maybe as a reward for subscribing or subscribing … I don’t know we’ll figure out something but I think you’re gonna like it and here’s what I’ve got on my mind.
I was up all night last night, not all night but most of the night and here’s what I was thinking. I realized that this is a commonly known law of trading. Remember we talked about earlier this week, about the correlation between sometimes happens and then something else occurs, right. You remember that? We talked about that this week. Well, here’s something that really strikes me as interesting and you probably have already heard this before but it just captured my attention.
Price consolidation, when price gets into a box and starts traveling inside of a box, right it’s banging against the sides of the box. When price is traveling inside of a box and it’s just bouncing around inside of that box, it’s winding itself up. Traders are getting super excited about whatever’s gonna break out. There’s no trend, maybe it’s sleeping, maybe it’s an inactive session of the market, maybe it’s a holiday.
I don’t know, we’re gonna get to that in a minute but with prices consolidating, you know what generally happens next, right? We have … when price is consolidating, eventually we have some kind of giant substantial massive breakout. Now you already know that, you’re probably saying to yourself, “Rob, I already knew that”, well okay that’s fine I knew that too but I didn’t realize that there could be some refinements done to this that make a huge difference.
Now, I want you to think about your favorite financial instrument in consolidation, that’s what I did last night and here are some things that I found out. Now, I’m gonna probably have to move this microphone closer so that I can draw on here and you can still hear me. But check this out, this is what I discovered. The instrument matters.
I found that the U.S. dollar, Mexican peso was totally brilliant for this but guess what else also matters? The timeframe mattered. The five minute timeframe was garbage. The consolidation that led to a breakout led to a false breakout and then a stop out and then another breakout and then another stop out and then I wanted to rip my head off and then I was like, well consolidations and breakouts don’t work on the U.S dollar, Mexican peso.
So I switched over to the daily timeframe, and then we had a breakout, a fake move and then another breakout and it would work and I needed two times to get that trade to work on that. Okay, so I went through this entire round of experimentation and what I arrived at was something really interesting and I’m gonna share this with you all next week, probably on Monday but as … at the latest on Tuesday.
What I found is that the U.S. dollar, Mexican peso on the 60 minute chart, using the ADX as a filter or a method of determining consolidation, on the 60 minute chart leads to super high probability and successful breakouts when on a lot of other timeframes and even other currency pairs.
I would have to look at a completely different combination of elements to try and get a system that works as well as this and in fact, this turned out to be … if not the highest probability breakout system that I’ve ever done, maybe the second highest, maybe the third highest but super substantial. And I’m gonna just call it the UMEX breakout or the Peso breakout.
Not to get into politics but I guess this could be the wall and then the peso could be breaking out of the wall. Okay, that was probably not in good taste but anyway, this is coming next week and I want to thank you for subscribing and watching and liking these videos. Subscribe to the video because the people here on YouTube are gonna be the first to know when this comes out next week and I will do some kind of offer so that when this comes out next week, this robot is available to you free for a limited time.