Video Blog: the Failure Test

This video blog is a follow up from this post, and digs into some of the details behind the Failure Test trade in a little more depth.


Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.

This Post Has 6 Comments

  1. Andre

    Hi Adam, thanks for sharing this great post! I have some questions:

    . It seems that you do not take in consideration any kind of volume information when analyzing the price behaviour around the support/resistence level, is that correct? (like for example the volume on the second level test)

    . Should we consider support/resistence as a fixed price or more like a region? Sometimes it is not clear for me where a specific good support/resistance price is.

    Thanks again for putting time and effort on these high quality, practical information!

  2. CJ

    Hi Adam –

    Thanks for the video. Very insightful. Great book as well.

    1. Adam

      Thank you!

  3. Vipul


    Nice insights on identifying potential trade setups. Most of the time though, most of my time is spent identifying areas to take profits. I mean, with reference to the failure test example of Gold at the highs, where would you have taken profits if a short was established somewhere near the highs?

    Some insight into taking profits would be really appreciated. Sometimes i wonder what if we could take profits based on the trade risk, like for eg. if i my stop loss is 3 points away from my entry trigger, how about taking profits at 9 points or 12 points? Given a huge sample size, would it result into outsized gains over a long enough period of time if we take profits at 4 times what we risk?

    1. Adam

      Post coming on this topic very soon. (as in today.) Thanks for the great question.

  4. KS

    Hi Adam
    Thanks for the video and the great book.
    I have a question on the risk management chapter – page 272 where your write:
    “On a technical note, this kind of reproducibility is important in Monte Carlo testing, and is a strong arguement against building these tests using Excel’s built in random number generator.”
    Could you explain what this means – is there something wrong with the Excel random number generator ?

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