I tested a trading strategy that worked around 69% of the time in a recent video.
It was the CPI news trading strategy.
I mean, in the last testing video, we found that when the CPI inflation news data is released, the price many times makes a big move in one direction.
We tested if there was a pattern to this move, and yes, there was.
If the actual CPI data comes in higher or lower than the forecasted data, then the price has a higher probability of making a big move.
For example, in the last video, I went to investing.com and looked at the US CPI inflation data.
If the US inflation is higher than the forecast, then the USD has a higher probability of getting stronger.
In EUROUSD, USD is on the right side, so EUROUSD has a higher probability of moving down.
If the US inflation is lower than the forecast, then the USD can get weaker.
This means EURO USD can move up.
This happened around 69% of the time in my previous testing.
Today, I want to create an entry-exit strategy around this with normal stop losses and profit targets.
So we can see how much profit we can make and the win rate.
Here’s what I’m going to do.
The timeframe is 30 minutes, and the chart is EURO USD.
This is the candle when the CPI data was released.
A very big move.
Now, the best place to enter a trade is close to the opening price of this candle.
But trading algorithms and institutions that get the CPI data faster than us, are going to place their trades pretty quickly.
By the time we retail traders see the data, the algorithms would have already made a big move in one direction.
If you are thinking, what if we place the trade just before or as soon as the candle appears?
Well, that wouldn’t work because you first have to check if the actual data was higher or lower than the forecast.
That takes time. We can only make an entry direction decision after looking at that data.
If you can write a script or code to take trades as soon as the data appears, that can work.
But not everyone can code.
So I’m going to test a manual method in this video that most traders can do.
I’m going to use the ATR indicator.
We know when the CPI inflation data is going to arrive by looking at the time and date on the investing.com page.
Just before the data arrives, I’m going to set trade entry orders in both directions one ATR value away.
For example, the current ATR value is added above and below the closing price of the candle.
It will look something like this.
When the news arrives, the price will trigger one of the entry orders.
When that happens, we can close the other order that didn’t get triggered and turn it into a stop loss.
Basically, we are using the ATR value to set both entry and stop loss prices.
Since holding the trade for four hours after the news release performed the best in the previous testing video, I’m going to exit the trade after four hours.
I tested this exact strategy on the EURO USD from 2017 to 2025, the same period I tested in the previous video.
And this is what happened.
I started testing from the latest to the oldest dates, from now to 2017.
In recent years, when inflation was really high, many traders and investors were watching and reacting to CPI inflation news releases.
There were big moves in the market.
These big moves resulted in big profits.
Like, there were trades that made six times more profit than the loss.
Also, I’m risking 1% per trade.
So some trades made really big profits while keeping the risk low.
But I also had trouble with some trades.
I mean, you know how the price sometimes moves up and down quickly before making a big move in one direction.
Well, that initial up-and-down noise triggered both entry and stop loss in the same candle sometimes.
I was testing on the 30-minute timeframe.
I could have checked which one triggered first by looking at a smaller timeframe, such as one minute.
But the one-minute candlestick data doesn’t go that far into the past.
So I couldn’t see if the entry or stop loss was triggered first.
If the stop loss was triggered, then the entry was not triggered first for there to be a loss.
But since I don’t know this, I still counted those setups as a loss.
So remember that whatever win rate you will see at the end of this video, the actual win rate is probably higher.
Another interesting thing I noticed was that when the price immediately moved strongly in the opposite direction of the entry, many times the entry was not triggered.
So in these clearly losing setups, there was no loss made as there was no entry triggered.
Another thing you will find interesting is that if you look at the profit graph data, you will see a pattern.
Since I started testing from the latest to oldest, you will see that the profit was huge in recent years compared to old setups.
You can rarely see any big spikes in profit in the old setups.
That means that the CPI news reaction in recent years was bigger than in the setups of old days.
Not only that, but we can also see that the win rate dropped in the old setups.
This basically means that the CPI inflation news strategy works when the CPI data is more important and looked at by many traders.
That’s when the win rate and profits are high.
Out of the 100 CPI setups I tested in the previous video, I found 63 setups this time where the actual CPI data came in different from the forecast.
This doesn’t include setups where entry was not triggered or the profit was at breakeven.
The win rate I got after testing these setups was around 49%.
I booked many profits that were way bigger than the risk.
So the reward-to-risk ratio was way higher than most of the strategies I have tested on the Trading Rush channel.
In other words, this 49% win rate is actually really high.
The highest profit on a single trade was 6%, and the highest loss was only 1%.
That’s really good.
The profit graph was also going in the upward direction.
But why didn’t this strategy get a 69% win rate like in the previous test?
Well, it’s because we took the trades late.
Since we are using the ATR distance, the entry is taken late, and part of the entry direction move is missed.
Basically, if we can take the entry as close to the opening price of the CPI release candle, we will get a much better win rate and profit.
Maybe I will try to create a bot or script around this to see how close I can get to the opening price.
I will try to do that in a future video.
Overall, this CPI strategy was one of the best strategies I have tested on the Trading Rush channel.
When the CPI inflation news events are more important, this strategy has a higher probability of working, according to the data.
That’s all!
Thanks for watching!