Right, back to my proposed ultimate candlestick trading method.
Look and study the following 5 minute chart of an evening star >>>
By
tymen1 at 2008-06-07
This chart has the same format as the previous one.
Our short entry with 1 amount turned into a "retrace first" trade and was closed at -10 pips.
Note that we
did not persist further in this chart or the previous chart with this entry.
Before, we would keep this entry, find the top of the retrace and add a 2nd amount with the computer averaging the entry.
Now we examine this short entry, find it to be going the wrong way and hence close it.
Remember that hyperlink I posted for reading just a little earlier.
Did you read it - here it is again.
Weekly Trading Lesson: Making and Correcting Trading Mistakes
The Starc band is now going up and, by definition, we look for the retrace top as the price action goes thro the Starc band. Preferably we should wait for a walk up the upper band for about 3 candles but the 2nd candle is red and no higher than the first. This green candle before it is also very extreme and passes thro the upper BB.
It will do for the purposes of illustration.
2 amounts, and again an exit when passing thro the lower Starc.
This gives 2 amounts of +17 pips =
34 pips.
The next trade is for experts only. The Starc band is now going down and a tag or near the top of the upper Starc is called for. The retrace does not do these things - instead it is a reaction from passing thro the lower Starc earlier.
I shall leave this amount out for now.
The next trade is a classic retrace/exit and follows the same rules as before with 2 amounts.
This gives 2 amounts of +20 pips =
40 pips.
Grand total is 64-spreads ie 64-6 (3 pips per trade) =
58 pips.
This chart was taken from an earlier trade shown on this thread, and, if I remember rightly, the stop loss was at 90.
Entry at 66. Risk is 90-66 = 24 pips.
So risk/reward ratio is 24 : 58 which is 1 : 2.4 which is good.
I have now to present a picture to show what I am driving at.
Tomorrow!!