THE JOY OF CANDLESTICK TRADING - a Learning Experience

Beginner Questions
260

[B]Now back to that trade - next 5 minute KC chart :[/B]

Look below >>>


By tymen1 at 2008-04-10

We decided to stay on the 5 minute chart (a good place to see all the action). All started to go well, but then…

A green candle appeared and it was an engulfing green candle!! :mad:
OK, a 5 minute chart, a pattern here does not have much significance…or does it?
But the MACD is also starting to turn around !!!

Did we not say that the evening star was not properly on the upper BB but rather somewhat below it??
Does this not give room for the price to go up again - against us since we are going down (short) ?
Are we not now reaping the punishment for not choosing our patterns carefully ? :o

Sigh !..We are going to lose this trade ! :frowning:

[B]Next post.[/B]

261

[B]In frustration we turn back to the main 20 minute chart but as we watch the news only gets worse.[/B]

20 minute chart >>>


By tymen1 at 2008-04-10

Wow ! We have really stuffed this one up !! :mad:

The price has now gone right up and way past our short entry point of 42 and we are in the negative well and truely.

The top of the star is 55.

This trade is going to go right past our stop loss and shut down our hopes with a nice loss… Great work Bozo !!! :eek:

But did we set our stop loss correctly??..yes we did.

[U]How[/U]?..The stop loss is set 3 pips above the highest point in any pattern.
Or 3 pips lower in the case of patterns on the lower BB eg piercing patterns.

In this case it is set 3 pips above the star, which makes it at 58 pips.

[B]But caution ![/B]

Do you know how your charting platform works?
You must take account of your [U]spread[/U], and [U]different [/U]platforms do this [U]differently[/U].

On my GFT platform I can set a [U]short /U stop loss exactly and my trade will exit right there.
For example, if I set a short (sell) stop loss at, say, 10 pips, the trade will [U]close [/U]at [U]exactly [/U]10 pips.

On my GFT platform I have to set a [U]long /U stop loss at [U]one spread length [/U][U]higher[/U] to get a correct exit.

For example, suppose I trade EUR/USD - 3 pips spread.
I want to have a stop loss at 20, then I must set it at [U]23 [/U]pips.
Then if the price hits 20, it will [U]close [/U]my trade.

So if I make a [U]mistake [/U]and set the [U]long [/U]stop loss at 20, it will [U]close [/U]the trade at 17. :eek:

This is [U]not [/U]what I wanted - and you could lose out on great profits by making this mistake.

[B]So[/B]!..find out how [U]your [/U]program works with stop losses so you do [U]not [/U]make silly stop loss [U]mistakes[/U].

[B]Next post.[/B]

262

Tymen1 ; Again so many thanks for all your effort. I also trade with GFT and they allow you to run a demo as long as you like . When you have a live account. My demo is over a year old now. (Just for info). I will be setting this up on mine this weekend but probbablly place orders threw Oanda Tighter spreads .9 pip on EUR/USD… 2.5 Cable. Again Many Thanks PS. printer enjoyed the workout… Ken

263

[B]Well, we might as well die watching the 5 min KC chart. It is a quicker chart and we can perish quicker.[/B] :smiley:

Here it is >>>


By tymen1 at 2008-04-10

Our entry is shown by the black vertical line and, yep, the price is well above our entry. (sigh).

These things happen - I knew I was just a loser! :frowning:

Look at that MACD - going up like there is no tomorrow. Ahhrrrrgggg !

Oh…how rightous and just is our punishment for choosing a pattern not quite on the BB. We must…repent !!

Lets be cool…Yeah!..cooooooooooooool. Repentance is cool.!

So we lose - there will be another trade. :slight_smile:

[B]Wait for the next exciting episode!![/B]

[B]A lot of posts here. You need time to read and digest them.
So next post will be tomorrow at earliest.[/B]

264

New guy here, thank you very much for this thread!

Im only on page 6 right now, but hopefully I’ll have time to get through it this weekend.

265

Tymen,

I have been getting so much from this thread I thought I’d try and give what little I know back.

For all the metatrader users, here is how to get a 20 minute chart:

*The first step can be done in two places. Don’t do it first if you use other expert advisors you don’t want to affect. If you’re doing several pairs doing it first will save time.

1.Go to tools/options/expert advisors. Check ‘allow live trading’ and clear ‘Ask manual confirmation’ , check ‘allow DLL imports’ and clear ‘confirm DLL function calls’.

2.Open a chart and select the 5 minute timeframe.

3.Open the navigator, go to scripts and open period converter.

4.On the inputs tab change ‘ExtPeriodMultiplier’ to 4. If you skipped step 1, it can now be done on the ‘common’ tab.

5.Now go to ‘file/open offline’ and choose your chart. Look for it, it will be there. Whichever indicator you’re using, make sure visualization is on all timeframes or you won’t see it.

It will tick even though it says offline, but there’s a catch, you have to keep the 5 minute chart open and you can’t change times on either the 5min or the 20min. For one you can change times on, you need to open another chart.

Hopefully that helps and we can all be on time with Tymen.

266

I like ot call it a U-Turn. They are fun t see develop. Great earnings typicaly follow this pattern!

Great example Thanks!

267

I find that the smaller the time frame the tighter the profit and the larger the time frame the longer the run. Have you seen the same in your trades?

268

Have you checked out IBFX.com I have been pleased with thier honesty as a broker. But my question to you is What broker feels good about scalpers? LOL

269

Summerpip,

Bollinger bands are difficult for me could you explain to me and others what they track and how ot read them properly?

270

Bolinger Bands are a measure of volatility. 3 bands are used, the middle simply being a 20 period moving average. The 2 outer bands are standard deviations of the moving average. These bands are set at 2 std dev. and this incorporates about 90% of all the price action.

The outer bands are a measure of extremes and are put to good use in candlestick trading.

For more information, type Bolinger Bands into your Google search engine.

Hope this helps.

271

Welcome to the forum. You have landed on the best thread on this whole forum and you could not do better. :smiley:

Trust you will learn much and become a candlestick devotee. Forget about indicator trading and avoid losing your money! :smiley:

But your name…“Swamp Gas” ??? :eek: :stuck_out_tongue:

272

To Vulcan Classic :

This is a truely fabulous post! :slight_smile: :slight_smile: :slight_smile: :slight_smile:

It is clear that you are working very hard and your sheer determination is getting you places. Rarely do you see such dedication on this forum.

[B]MT4 users take note![/B]

I will set this post of yours on my favourites section so that if ever an MT4 user ask how to set time frames I will refer them directly to your post here on page 27.

I can see many people benefitting from your post - I submit a recommendation - that you open a new one-post thread and in it you repeat all the details that you did here.

I think many readers will be very thankful.

Pipcrawler or Pipdiddy should give you at least 10 extra points for posting this material!!

273

I like your use of language - you have a way with it that I cannot do.

Your understanding of a good exit is to be admired - excellent work! :slight_smile: :slight_smile: :slight_smile: :slight_smile:

274

Hello pipwrangler,

i hope you read this thread carefully. As we all know now Tymans standard setting is [B]20[/B] and not 14 (see post #133). I chosed 14 because my platform comes with 14 as default setting and they talk about 14 and 20 as usual settings.

I’m by far no expert in Bollinger bands and bollinger bands are not only difficult to you.:):slight_smile:
Up to now I used them like an overbought/oversold indicator (if I use them) and am now trying to learn more from tyman.

If you want more try Bollinger Band and google bollinger bands. I think there you get information first hand.
Oh… I forgot some important fact. For all new readers and those who are not reading carefully my post could be misleading. Therefore I will delete my post.
Happy trading Summerpip

275

[B]And now back to that EUR/USD trade on a on Thursday 10.[/B]

We are looking here at the [U]5 minute KC chart[/U].

At last call we had resigned ourselves to an impending loss by the price action hitting the stop loss.

We were left with the “[U]3 green soldiers[/U]” pattern signaling price action going up and up against our wishes.

[B]Then suddenly [/B]>>>


By tymen1 at 2008-04-10

The price suddenly goes down again! :slight_smile:
After a doji, it then goes up again! :mad:

It then develops as a green candle and roars upwards like an Apollo rocket going even 1 pip above the star (highlighted in blue) to reach a height of 56 pips (highlighted in yellow) - only 2 pips short of our stop loss. :eek:

Then it plummets down and becomes a red candle (highlighted in yellow).
The MACD goes down with it.

Do you like roller coaster rides ??

Do we have an exit?

Not yet, but the next two candles (red) bring the trade to rock bottom and the MACD is heading down and now is beneath zero.

At the end of the chart, the price goes up again !!!

Do we exit?

Lets look at the next 5 minute chart.

[B]Next post.[/B]

276

[B]Here is the next chart (5 minute).[/B] >>>


By tymen1 at 2008-04-10

[B]Important note here. The Keltner chart is no longer shaded in grey. It is as it truely appears on my charts - and yours.
The upper/lower bands are in grey and the middle band is in yellow. All 3 Bolinger bands remain in royal blue. [/B]

At the end of the chart the price went up :frowning:
Then down again :slight_smile:

Boy, we are really getting our money’s worth when it comes to roller coaster rides!! :smiley:

I exited at the doji as shown at 29. This gave me entry-exit ie 42-29=13 pips.

Thats 3 for the spread (EUR/USD) and 10 for me.

I had enough of the roller coaster - I get very sick on them !!

But what about if you are still in the trade. Do we exit?
Sooner or later that MACD is going to flattern out.
At present the height of MACD below zero is getting to be the same as the height of MACD above zero.

So do we exit?

I give you no answers. The choice is yours to make.

[B]Lets update to the next 5 minute chart.[/B]

277

[B]The last 5 minute chart[/B] >>>


By tymen1 at 2008-04-11

Here we definitely come to the end of the trade as the MACD flattens out as predicted. The price, however, goes up as the MACD flattens!

So you are left with an exit of 26. Not much better than my exit of 29. :smiley:

Maybe you should have closed at the very bottom of the red candle. Easy to see in hindsight eh ?! :smiley: :smiley:
[B]
Well, lets go once more to the main 20 minute chart to bring conclusions and closure to this trade.[/B]

278

[B]Here is the final chart of the series - 20 minute chart[/B] >>>


By tymen1 at 2008-04-10

The evening star is highlighted in blue.

As you can see, this was a dramatic trade, going down first, then retracing upwards to within 2 pips of our stop loss, then plummeting down to a real profit and passing thro the lower Bolinger band.

At the end, a large, green engulfing candle appeared on the lower BB giving opportunity to trade [U]long [/U]and make a 2nd profit! :smiley:

So where do we exit?

To summarize, a trade is considered active until either …

  1. the stop loss is hit.
  2. a target price is hit…whichever comes first.

So where are you going to set your target profit?

Well, that is for you to choose. Do you like roller coaster rides? Or will you trust intuition and get out while the going is good?

I, for one, scalp for safety. The safest pips are those closest to the candle pattern.

Something will need to be said about risk/reward ratios.

Lets conclude :…we have looked at :

  1. Choosing candle patterns carefully
  2. Setting stop losses correctly
  3. Considered exit a method of exit.

What have you learnt?

[B]That brings this series to a close. I am very tired from all the preparation work and unfortunately, I have taken ill. So I will be confined to bed. My ginger long haired cat, Sweetie, will keep me company.

So I will take a rest, and, all being well, I will continue on Tuesday.[/B]

279

I have cut and paste this thread into MSWord and have been studying for the past 2 days…I hope you don’t mind that - please let me know if its a problem…“What have I learned”…hope to have a good answer by Monday…have a great weekend and thanks for sharing your knowledge…:slight_smile: