The 5 minute KC chart >>>
By
tymen1 at 2008-04-23
The chart shows a DiNapoli preferred MACD in the bottom half of the chart. The values for this are close to 9, 5, 17. But it does not make much difference which MACD you use.
I am working on evolving this entry method to eliminating the MACD. As you try to guage entry, it moves too much and you really do not know when to click the mouse!!
The BB and MACD vectors are shown at the entry line on the chart. The Keltner is shaded grey with the mid band in yellow.
A yellow highlighted oval shows the BB and MACD vectors together with the resultant which is going down slightly.
This means
best entry somewhere
below the yellow KC mid band and we snatch the entry at 931 - which was effectively at
market when the 4th candle of the evening star
opened.
The short entry was snatched with
half the allocated lots.
A short ride down with 3 red candles, then a pullback. We add the remaining lots when the price goes thro the upper Keltner band. The price may well go higher but this is a good place to add because it is an extreme.
So we
added at 943. The computer now
averages our short entry to 937. This is 10 pips lower than our stop loss at 947.
To cater for our stop loss distance we must set a
target profit of at least 10 pips, but preferably
greater.
We let the trade drag on. As long as the stop loss is not hit, the trade is active and we watch as the profit pip count grows.
Resetting the stop loss to a lower point to lock in profits is
not a good idea. There is a
pullback coming within 2 pips of our stop loss. So lowering our stop loss would have seen us make a small profit of much fewer pips.
The risk is, of course, that the pullback will go thro our stop loss and destroy our profits with a loss.
But we did assess the trade
beforehand and placed our stoploss intelligently!!
So we weather this one pullback, but not another since the price now roars down to 891. This is very satisfying and we exit while we can.
* * *
Tomorrow, I will not post.
In Australia it is ANZAC DAY - a war memorial day.
Although I am a Dutch citizen, I live in Australia and I will respect Australians with their ceremony.