Examples of invalid setups | Judas Swing Strategy 07/04/2025As traders, it's crucial to spend time in the lab backtesting your strategy and exploring ways to optimize it for better performance in live markets. You’ll start to notice recurring patterns, some that work in your favor, and others that consistently lead to unnecessary losses. It might take time to spot these patterns and even longer to refine them to fit your trading system, but going through this process is what helps you evolve. In the long run, this is what you need to do to become a better trader.
We spent a considerable amount of time refining our entry technique for the Judas Swing strategy after noticing a recurring issue where entering with a limit order sometimes gets us stopped out on the very same candle. After testing a few alternative entry methods and making some key adjustments, we finally found an approach that worked consistently for us. On Monday, April 7th, 2025, this refinement proved its worth by saving us from two potentially painful losses. In this post, we’ll walk you through exactly what happened and how the improved entry made all the difference.
We got to our trading desks ready to scout for setups and were drawn to promising setups forming on both FX:AUDUSD and $NZDUSD. This was exciting since the previous week offered no solid trading opportunities. As price swept the liquidity resting above the highs of the zone our bias quickly shifted toward potential selling setups for the session. But before taking any trade, we always ensure every item on our entry checklist is met. Here’s what we look for:
1. A break of structure to the sell side
2. The formation of a Fair Value Gap (FVG)
3. A retracement into the FVG
4. Entry only after a confirmed candle close
With the first two requirements on our checklist confirmed, all that remained were the final two and at this stage, patience is key. As price began retracing toward the FVG on both FX:AUDUSD and OANDA:NZDUSD , things got interesting. Price came into the Fair Value Gap on both pairs, checking off the third requirement. Now, all that was left was to wait for the current candle to close.
But that’s where things will be clear to you now.
Had we jumped in early with a limit order, we would’ve been stopped out on the same candle. This moment served as a perfect reminder of why we now wait for a confirmed candle close before taking any trade. It’s this extra step that helps us avoid unnecessary losses and stick to high-quality setups.
This entry technique like any other, comes with its own set of pros and cons. At times a limit order might offer a more favorable entry price compared to waiting for a candle close and that can influence both your stop-loss and take-profit placements. On the flip side, there are also instances where waiting for the candle close gives you a better entry than the limit order would have. That’s why it’s so important to backtest.
Your job as a trader is to put in the time to study and test what works best for your system. We chose this candle close entry method because we did the work. After extensive backtesting and data analysis, we found this approach aligns best with the results we aim for in the long run.
