Welcome to the How to Record Statistics lesson from Coach Severin, where he delves into the distinct differences between recording statistics for a static level versus recording statistics for a playbook. This lesson does not replace Coach Igor’s “How to Record Statistics” lesson, but merely serves to expand on its original ideas. Enjoy!
TIMESTAMPS
00:00 – INTRODUCTION
00:43 – UTILITY
Building statistics is fundamental for:
> Informed decision making.
> Risk management.
> Continuous improvement.
> Maintaining consistency.
> Confidence in trading performance.
Statistics transform trading from a subjective endeavor into a data-driven practice.
The goal is to determine whether a setup has a positive expectancy over the long term.
This is an objective way to evaluate the effectiveness of and reliability of a trading strategy or reference level.
> Determine if a strategy or a playbook has genuine edge.
> Statistical characteristics to assess its risk.
> Mechanical trade execution.
> Helps to stick to a playbook during periods of drawdown.
Backtesting:
Analyzing historical data and outcomes to gauge how well a setup performed in the past.
Accelerates the development of a robust statistical foundation for a trading setup.
Exposure to market scenarios you may not have actively traded.
03:30 – IMPLEMENTATION
Trading is a dynamic and complex endeavor that constantly evolves.
> It is crucial to track statistics not only for static levels but also test specific playbooks and setups across varying market conditions.
Backtesting of a static level:
> A static level is a level that remains unchanged during the trading day.
> Example: dOpen, pdHigh and pdLow
> Separate statistics for the first touch during Overnight and New York sessions as well as a combined statistic.
> By analyzing historical data and outcomes, traders can gauge how well a particular setup performs and build a statistic.
🔎 04:27 Example of the first touch of dOpen statistics.
Backtesting a Playbook:
> A playbook involves patterns related to price movements and specific market conditions.
> Dynamic relationships between levels and market conditions.
> Reliability and profitability of specific playbooks.
> A playbook needs rules that define that setup.
> Remember: “By analyzing historical data and outcomes, traders can gauge how well a particular setup performs.”
> Playbook: “By analyzing historical data and outcomes, traders can gauge how well a particular setup performs under various market conditions.
🔎 07:29 Example of Playbook: dOpen in the upper/lower quartile.
Explanation:
> Relationship between dOpen and previous day’s range.
> Split the pDay range into 4 quartiles.
> Relationship between a dOpen in the upper or lower quartile and a move above/below pdHigh/pdLow.
🔎 08:30 Visual example: dOpen in the upper/lower quartile.
> Test as many observations as possible and build the statistics.
🔎 11:34 Overnight session Supply & Demand flip:
Explanation:
> Test of overnight session supply and demand zone during NY.
> Supply & Demand zone is only qualified if at least 3x supply or demand.
Entry criteria:
> 15-min close above/below overnight session supply/demand zone.
> Based on 5-min orderflow
Invalidation:
> 15-min close below/above the overnight session supply/demand zone.
> This is not the stop loss.
🔎 14:34 Overnight session Supply & Demand flip visual example.
> Test as many observations as possible and build a statistic.
18:26 – TIPS & TRICKS
★ Ideas for playbooks emerge during the backtesting process itself.
★ Continuously collecting and analyzing data helps you to refine your trading strategies and adapt to any market conditions.
★ There are no limits to backtesting any playbook that piques your interest.
20:50 – CLOSING THOUGHTS