Blackbox Trading Edge
The Blackbox Trading Edge is based on specific price action chart patterns that form regularly as price moves up and down.
When these patterns form our Trading Edge is in play providing potential trade opportunities.
Blackbox specialize in trading the DAX intraday and utilize 2R money management rules where the intended profit target is twice the amount risked. Since we trade intraday, no overnight positions are held so the only cost incurred is the spread.
UK based traders benefit from the current legislation where all profits made from spread betting are tax free.
This means that when targeting 2R trades a strike rate of 40% is going to result in a positive equity curve.
This equates to what’s known as a very positive traders equation.
An example of this positive traders equation is demonstrated in the following screenshots. The first is a Trade Console extract from the 21st September 2017 showing the results of five DAX trades taken with intended 2R targets. The first three trades shown in red were losers but the next two trades shown in green were winners, resulting in a 40% strike rate and a net profit of +0.90R.
This next screenshot shows a sixth trade that resulted in a 2R winner which increased the strike rate to 50% and the net profit to +2.90R for the day. With 2% of the trade bank being assigned to each trade this equates to a +5.80% growth of the trade bank.
Obviously, to achieve a positive traders equation the trading edge must have been rigorously tried and tested such that the trader knows it inside-out and has full confidence in it. That’s why practicing on a trading simulator and using a demo account is a vital stage in the trading journey and the value in doing so should not be underestimated.
What we’ve described above is the key principle behind a trading edge and how thinking in terms of Rvalue and strike rate means that winning only four or five in every ten 2R trades will result in a positive equity curve.
The video “Not Profitable in Trading? Here Are 7 Reasons Why!” by Adam Khoo does a great job of explaining these concepts and is well worth watching.
The video is 37 minutes long and the following sections are particularly relevant:
- 13:50 – 19:10 shows a Profit/Loss Zone Graph.
- 27:50 – 37:46 explains why a low Risk-Reward ratio will result in an overall loss.
In addition to specific price action chart patterns, Blackbox believe that the trading environment itself can also contribute to putting probabilities in your favour. Therefore the Trade Controller has been designed with that in mind and the environment it provides is an integral part of our trading edge.
- Blackbox Trade Controller
The Blackbox Trade Controller is a hybrid trade management system designed to free-up the trader to concentrate on trade setups by: –- Automatically marking up executed trade setups and the corresponding results on the chart.
- Automatically logging trade results to a database.
- Providing journaling tools that make the review and analysis of trade results easy and efficient.
- Controlling risk based on user defined trade money management settings.
- Automatically overlaying key structure onto the chart in the form of the Price Action Grid.
- Price Action Grid
The Price Action Grid consists of chart structure in the form of support and resistance. The Grid combines higher and lower time frame structure which is both horizontal and sloping. The Grid components are displayed in complimentary colours and can be overlaid in an accurate and meaningful manner without cluttering the chart.
The Grid can be projected into the future to provide guidance as to how price is likely to be channelled. High probability trade opportunities occur when price interacts with it, particularly at grid intersections. These intersections can form areas of ‘Resistive Confluence’ (RESCON) or ‘Supportive Confluence’ (SUPCON).