How different setups work in different regimes

fvbo indicators market regime strategy vbo Feb 15, 2021

The FVBO has been doing quite well against some US Dollar FX pairs this past week, I pointed them out on Twitter. Let's have a look at USDJPY 
Earlier in the week I was talking about the VBO setup, being the first breakout of the channel. I have totally cut out this strategy from my main trading and have improved to the new VBO 2.0 (vbo +, or whatever we decide to name it!). 

The new VBO would not take that first breakout and instead wait for the FVBO, which we saw play out nicely on Monday and Tuesday, hitting our profit target with little pause. Where VBO 2.0 comes in would be a pause and a reversal higher...we did not get that. 

Additionally the Bear Quiet/Neutral regime that USDJPY currently is in, doesn't work very well with VBO2 but it is incredibly powerful trading the FVBO. 

If you are utterly confused by now, sorry. I am putting together the full VBO2 and FVBO strategy videos and some backtests. Stay tuned there. 

Next we had the USDCHF which is pretty much the exact same trade just in the opposite direction

 Got long Thursday night and hit profit target on Friday.

At this point the market regime for many of the FX markets is in Bear Quiet or Neutral. This means failed breakout setups are in high demand, not just the FVBO.

As Grant points out in his backtesting work, "You should take every single Failed Breakout setup in the Neutral market regimes."

And he should know, because he's done the 1,000's of manually backtested trades to know if it's true or not. 

This is just from 2016 to Present trading only Failed Breakouts, (FBO or FVBO), you can see that some assets are beast mode, and some don't perform very well at all

If you knew that USDCAD had a 85% win rate and a SQN of 6.45 then you'd be looking for failed breakouts ALL.THE.TIME!

Which is what we had last week, there was a Failed Breakout double bottom setup on USDCAD and we took it

Armed with this information you start to realize that making good trades in this game is less about the actual signal/reason that you get in to the trade, but more the market regime and the tools you leverage to make money consistently in the market. 

  • Entry techniques (not signals) the HOW you get into a trade
  • Utilizing Position Sizing and Risk Management techniques to maximize your returns and protect your downside
  • Market Regimes and applying the right strategies to the appropriate regime
  • Getting rid of everything else that doesn't benefit you

The last thing I want to look at is what we've been talking about the last few weeks, the NQ futures and QQQ in a Bull quiet market regime.

As I have pointed out at least 100 times since April, the NQ/QQQ or just Nasdaq is in bull quiet market regime, based exclusively off of price action. 

Part of the work we do here at Pollinate is figuring out ways to categorize market regimes and then find characteristics of each market regime. 

The interesting thing about doing it this way is that sometimes we can use the SQN indicator (which I write about often) to help us quantify a market regime, but we can also you another tool like the ATR (14) on a daily chart, or, like in this case the actual price action. 

Think about it, if the characteristics of a certain regime are going to be there, why do we need to rely on an indicator to tell us that the characteristics are supposed to be there?

So if we know that the one key characteristic of the Bull Quiet regime is that dips get bought, breakouts get bought and amazing sell setups fail over and over and over and over and over...Then we don't need to have an indicator tell us we are in that regime, we just look for those characteristics. 

Like now, after Nasdaq's massive 1 day selloff last week, is currently being met with lot's of buying pressure. 

It's too early to tell, but for now it appears that bulls caught the ball and are mounting yet another dip buying comeback. 

I have yet to exit my multiple entry long positions in $NQ Futures, as the dips keep getting bought up hand over fist. 


PS - I am starting to podcast every few days now, just solo casts mostly. Please give them a listen, I really enjoy the feedback. If you like the post do give me a 5 Star rating on iTunes and leave a comment. Also feel free to let me know what you'd like me to cover


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