Yesterday I posted the Little Dipper setup parameters so I thought it would be interesting to see how it performed this morning. The initial signal looks for the trend between 3:00 and 4:00, which in this case was down slope. The trend was confirmed by the parabolics BUT, and this is a big BUT, the 8/8 hi/lo channel was clearly not confirming. What to do? My approach was simply to put on 1 lot at 4:00 rather than 2 in order to reduce risk exposure.
The Little Dipper took off with a vengeance at 4:00 for a steady sell off until 5:00, our first 1/2 position exit target for a quick 40 pips. The EUR then forms a squat bar, rallies at 5:15 and then signals our second conditional exit . . a 15 pip trailing stop . . at 5:20 which closes the other half of the position for a net gain of 25 pips. Today’s action was a clean example of the Little Dipper setup . . the only outlier that could have improved the odds, as mentioned previously, was a confirmation from the 8/8 hi/lo channel. While the setup did produce a net 32 pip/lot return the big money left on the table was the 8:00 to 9:10 110 pip slide. When I figure out how to see those moves coming I’ll just call it the Gravy Train.
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