Backtesting my "surgical" $1k/day trading system

A system that you don't trust isn't a system, it's just a suggestion, and most traders backtest to fix that. They'll see the wins, and then reassure themselves that they can trust their system. But that's not why you should backtest, because that trust is fragile. It can easily fall apart the moment you experience some difficulty with the market not going your way. I backtest to prove that I don't need to think, because trust isn't the goal, it's automation. The point isn't to feel good about the system. It's to follow it so many times that when you trade, there's nothing left to decide. And that's what we're going to do in this video. I'm going to be backtesting a full week of ES Futures using the LCE model. If you're new here, I'll link some videos about LCE right now to get you set up. But it's just going to be a full raw week from start to finish. No cherry picking or specific setup, just exactly how you should handle every session. Now before we get into it, let's lay out a few ground rules. The first rule is that every trade has to follow the LCE model, Level Confirmation Execution. That means every trade is a level-to-level move. If it's not, I'm not looking at it. Second, I only trade during regular market hours, 9.30am to 4pm Eastern. And the best moves usually happen before noon. Third, I only take breakout trades. So that means I'm waiting for price to break into a new level and continue in that direction. If it's reversing back to the level it came from, that's a mean reversion trade, and I'm not touching it. And the last one, risk stays the same on every single trade. Doesn't matter how confident I feel, doesn't matter what happened yesterday. Same side, every time. So the week we'll be covering is March 30th to April 2nd. Now let's get into it, starting with Monday. Now this is the one-hour time frame, right before the opening. And the first thing we want to do here is establish our higher time frame bias. So the cloud is clearly bearish. The price has recently been in a downtrend, and the price rejected the cloud multiple times to move lower. Based solely on the cloud, our bias is bearish. However, we do need to be careful here because the price had a sharp multi-level drop, and then had a V-shaped recovery. Now this doesn't guarantee that the price is going to keep bouncing higher or anything, but it's something to keep in mind. Because a downtrend is lower highs and lower lows, right? So we make a lower high, then a lower low, then a lower high, and so on. If we fail to make a lower low, then the price is in a range and then has a real risk of transitioning into an uptrend. So if the price makes an extreme low, we then need to break that extreme low for the downtrend to continue. And that doesn't mean it's automatically not going to happen, but it's just more difficult for sellers to achieve than a regular downtrend swing. But anyway, that doesn't discredit the bearish bias of the cloud or anything. So our official bias for the one hour here is going to be bearish, but cautious. Then we're going to drop down to the 30 minute. And the 30 minute shows us something a little different. We were bearish before, but with the intensity of the recent bounce, the cloud is tilting upward. However, the cloud isn't flipped or anything. It's still bearish, but it's tilting upward because of recent price action. And that means that our bias isn't bullish, but it's not strongly bearish either. That makes our bias on this timeframe neutral. Now let's drop down to the 15. And the 15 is once again showing, based on recent price action, that the cloud is tilting upward. The cloud is still thin on this timeframe though. It doesn't have a super strong bullish conviction, especially given that the price is still in the middle of the one hour timeframe resistance. So although it seems bullish, our bias for this timeframe would still be neutral. And finally, let's drop down to the 5 minute to see how that looks. And the 5 minute looks similar to the 15, which is that the recent upswing caused the cloud to flip bullish. So we have an interesting situation here, which is that the cloud is bearish on the 1 hour, although starting to flatten. We have the smaller timeframes bullish or starting to flip bullish. So this may very well be the start of a bullish flip. But here's the issue. Even if it was a full-on bullish flip, we wouldn't be able to make it very far. Because take a look at the 1 hour cloud. If the price breaks out to the upside within the next 2 or 3 hours, then that'll print 2 or 3 candles. Even if those candles are super strongly bullish, it won't be enough to drag the cloud up and turn it bullish. We have no bullish cloud support, so if the price does decide to move to the upside, it won't go more than a level or two before getting stretched. And we don't have a super strong bias toward the downside either. We have slightly better infrastructure because of the 1 hour bias, but still a similar situation. So ultimately, we don't expect the price to trend far today in either direction. We could basically treat it like a range day. Which means we need to be extra cautious about entering breakouts. We're going to set alerts at both the upper and lower level here and wait for one of them to get hit. And here, we see that the price crashed to the bottom level with urgency. So this is in line with the 1 hour cloud bias. And the 5 minute is also starting to slope down. That means we could enter short here and target the next level. So we'll go short with our stop above market structure and then wait for it to play out. Now here we see that the price did drop, but stopped and reversed right before our target level. This is normal since price doesn't have a clear directional bias. So it's prone to chop and back and forth swings. It's not going to be clean price action. But at this point, you would have already moved your stop to break even. So you would have gotten stopped here and wouldn't have won or lost anything. And what you do here is just reset your bias. Since this is the current level, we can now set our alerts at both the level above this one and the level below this one. Then we wait for another breakout toward either side. Now here we see that the price is clearly breaking down. Our cloud has gotten more bearish. And we've had more attempts to break higher here, but failed. We have more bearish structure on our side. So it's safe to assume that we'll continue breaking down and we can go short again. Then we enter and just wait. Now here the move finally played out. We had more structure accumulating. So it put a lot of downward pressure and the move was able to play out. So now we have a break-even trade. And we also have a winning trade. That's our one win for the day. And now we can move on to Tuesday. So this is the one hour on Tuesday. And we see that the price attempted to break the overall downtrend yesterday, but failed. And then immediately bounced higher. Now we're in a similar place to yesterday. Except we have a double bottom here and the price is less bearish overall. The downtrend is broken and we're now in a range. And when it comes to the cloud, we see that the cloud has properly flattened. Which confirms even further that we're in a range. That means we don't have a bias toward either side. It has an equal chance of breaking out to the upside or to the downside. And since we're in a range, we just want to be extra cautious of that. So our bias for the one hour is neutral. Let's drop down to the 30. And on the 30 we see something similar, which is that the cloud is relatively flat. It's been getting pulled up by recent price action, but still mostly flat. So the 30 minute also has a neutral bias. And we should be expecting the same thing on the 15. Which is a lightly bullish cloud that's been pulled up from recent price action. But no clear trending direction. So our bias on all three higher time frames is neutral. We expect a breakout on both sides with equal probability. Now let's drop down to the 5 minute to get a closer look. The 5 minute is also going to be pretty much neutral. So we're going to set our alerts at both the upper and lower level. And then wait to get alerted. And here we get an immediate surge to the upper supply level. Ideally we'd want to wait for the price to consolidate a little bit more to let the cloud develop. But it doesn't need to be perfect every time. The price could easily just take off to our next level without us. We have a risk management plan in place anyway. So we'll enter long here and place our stop near the cloud and target the next level report. Then we simply wait. Now the price does move about halfway to our target. So at this point we would have already moved our stop to break even. And we would have gotten stopped out. It doesn't always feel great to get stopped early on a move. But it'll save you more often than not. So at this point the clouds are getting a little more bullish overall. That means we can set our alert at the next supply level and look for a break out there. We can also set an alert to the downside. But we need to remember that our bias is getting more bullish. It's not so neutral anymore. In fact at this point we're right at 15 minute cloud support at this level. So we need to be cautious toward the short side. And we're now looking for a break to the upside. And then we just wait. So here we see that our upper alert eventually gets hit after lots of ranging. And immediately breaks higher. This was a news event so the price spiked quickly and might have been harder to catch. But this would have been the only other valid break out move if you caught it. At this point the price is too overstretched for us to enter a good trade for the rest of the day. So you either caught the first move and got out at break even. Maybe a loss if you didn't move your stop on time and the second move was possible. So a bit of a trickier day but still manageable. Now let's move to Wednesday. And by the way if you want help applying this in the real market. I have an accelerator program where I work with traders directly. You get the exact levels I used, one on one support from me. And a community of people all trading the same way. Link is below if you're interested. Okay so on the one hour we now have a full blown bullish bias. The price rallied from yesterday and consolidated. Which gave time for the cloud to start sloping upward. So our bias on the one hour is bullish. The price action situation is a little more interesting here because we had this big drop recently. But we'll deal with that later. Let's drop down to the 30. Where we should expect something similar. And the 30 is also strongly bullish. We had a bit of a slump here recently. But we'll see what that looks like later on. Let's see what the 15 looks like. And the 15, just like the 30. Has a relatively strong bullish bias. So we have a bullish bias on all three higher time frames. Let's get down to the 5 minute to see what that looks like. And the 5 minute has actually been flat. And is turning down now. Due to the recent move. Now if we were to turn bearish here solely off this. It would be a massive mistake. All of our other time frames are bullish. So realistically, we'd wait for the cloud here to turn back bullish. And then go long in an A plus setup with all the clouds aligned. The alternative would be waiting for the clouds to turn downward and flip bearish. Which would take much more time and effort. That's not likely to happen in this session. So we set our alerts to both the upside and downside. And then wait to see what happens. And we finally get alerted at the supply level. With the cloud finally starting to slope upward. This is a strong sign to go long. Especially given that all the other clouds are bullish. And will support this move. So we enter long with our stop under market structure. And our target at the next supply level. Let's see what happens. Now two things could have happened here. We would have either gotten our target hit. Or gotten stopped out at break even. Depending on how early we moved our stop to break even. I always recommend moving it when the price gets around halfway to target. So it's not exactly halfway. But if you would have moved it early. You would have gotten stopped early. But that's essentially the outcome for today's trade. And we did end up having another level to level move later on. But it was counter trend. So not an ideal trade to take. Although it still could have ended up working. That's how you would have traded Wednesday. Now let's go to Thursday. So we had this sudden overnight drop. Which dragged the cloud down quite a bit. Although interestingly enough. It didn't flip yet. The cloud is sloping down here. Or can be described as flat at the very least. And if the price keeps dragging down. The cloud can flip in the next one or two candles. So our bias for the one hour is going to be neutral. And maybe a little bearish. But it's not a strong or even a moderate bearish bias. Because the cloud is not bearish enough. It hasn't even flipped. The only indication would be that the price is far under the cloud. But that might even be a disadvantage. The advantage could stretch too far. It could snap back. So our bias is effectively neutral. And we can expect it to break out toward either side with equal probability. Let's go down to the 30. The 30 is more bearish. Because it's swayed by recent price action. So our bias for the 30 is going to be mildly bearish. We have to keep in mind that the one hour is most important. And the one hour is pointing neutral. So we can't have a super strong bias on lower time frames. Now let's go down to the 15. We should expect the same bias. Since it's also been swayed by recent price action. So we have an overall bearish bias. Although it's a light one. Because the one hour is flat. So we can drop down to the 5 minute. And start setting our alerts to both sides. The 5 minute is also flat. And doesn't have a clear bias. Similar to the one hour. So let's see what happens. And we see that the price is attempting to break higher here. So we're in the process of breaking through all these clouds. And turning them from bearish to neutral. And maybe bullish. That's what we're seeing here so far. Now we're in the middle of the clouds. So it's not really the best place to pick a side and enter a trade. We can essentially do nothing here. And just set our alerts at the upper and lower level. And wait again. Now here we had a very strong spike upward. And it would have been very difficult to catch. Since it happened so quickly. And also since the cloud wasn't developed enough anyway. And at this point. The price is too far from the cloud to take the trade. So we stop here. Now Friday was a holiday. So this was only a 4 day week. So that's how you'd trade a week like this using the LCE model. It was definitely a choppier week with less opportunity. But we were still able to manage it by following our rules. And only trading level to level. If this helped. Be sure to check out the accelerator. And leave a like. And subscribe. I'll see you in the next video.