A trader explains how he made $1.75M using a mean reversion strategy around CPI releases. He identifies a fair price from the pre-news candle, enters on a break of structure below it, and targets that fair price as profit. Risk is fixed at $500 per trade, with the profit target as the main variable he adjusts.
My favorite trade to take is the expected news reversion. This was CPI, 8:30 AM, red folder news. It's priced in. This right here is the price before news. Obviously, green candle means it started here and ended up there. So this is going to be the fair price going forward. Now, in terms of the entry, every entry is going to be short just back towards this fair price here. What I'll do is I'll wait for a displacement candle or a break of structure. And we do get a break of structure right here because it is a wick lower than the 2 candles next to it. And my target is going to be all the way back down here towards the fair price. Stop loss is going to be static, optimized based on the prop firm. If my account is telling me to risk $500, Then it's going to be at that amount of points because my profit target is what I'm really optimizing for.
