I will now mark the exercises, not to be the big conceited school teacher, but rather to give useful (hopefully) feedback as a reward to those who took the trouble to answer the questions.
[U]Exercise 4[/U] carries 6 marks. Questions 1+3 are worth 2 marks each.
ex 4 - 3 marks
ex 5 - 5 marks - good work!
Total 8/11
Vulcan Classic ;
ex 4 - 4 marks
ex 5 - 3 marks
Total 7/11
Kenneth Lee ;
ex 4 - 5 marks
ex 5 - 3 marks.
Total 8/11
Ericoco ;
ex 4 - 6 marks - well done!
ex 5 - 3 marks.
Total 9/11
The best trick with these questions is to number the answers corresponding to the numbers of the questions, eg if there are separate 4 questions, then give 4 separate answers.
Be very specific with each answer - do not be vague.
Remember, you cannot be vague when you trade!!
Thank you to Sinn1, Vulcan Classic, Kenneth Lee and Ericoco for posting answers to the exercises.
It makes this thread worthwhile, and others who did not have the courage to post answers may learn also!
[B]I will now continue the theme of this thread.[/B]
[B]Before I continue the theme, if either Sinn1, Vulcan Classic, Kenneth Lee or Ericoco or any other reader is unhappy that I marked the exercises as above, then I am happy to delete the post as a matter of respect.[/B]
Iâm sure the others will agree that your marks donât need to be deleted and your feedback on the exercise was appreciated.
Please continue with the lessons. Iâm looking forward to reading what else you have at your disposal, especially how you trade other candle stick patterns.
[B]OK, now a final set of posts that will lead straight to the FINAL TRADING METHOD.[/B]
These 9 posts following will take the form of exercises.
This series of 9 are the stages in trading a particular evening star pattern.
I traded this pattern myself and made an excellent profit on it.
I will not tell you when this pattern occurred because then you can then cheat and look it up on your program!!
Each chart is a trading stage and simple questions follow each one.
Try anwering them and posting your answers - the discussion is bound to be very interesting.
I will post one chart per day (9 days).
Each new post will also include answers to the previous post.
At the end of this I will post a drawing (already prepared) showing the [U]final trading method.[/U]
[B]After a short evaluation by readers of this method, we will then use it, amended or not, to start looking at and trading the [U]engulfing pattern[/U].[/B]
First of all Tymen, thanks for all the effort you have put into this thread, I have learn a great deal.
The first candle does not come close to middle Bollinger band which is a good sign. It extends into the upper band, which again is good sign. Strong first candle.
The second candle, has a small body, and goes fairly high into upper band and doesnât appear to retreat past mid point of first candle.
The third candle goes past midpoint of first candle.
Overall, I would give this a moderately strong evening star. The Bollinger band is rising at the third candle so I would set my stop-loss at a medium risk level. That level would be 1 pip above third candle body or 108.04.
The star candle Green is a nice Possible retrace pattern equal wicks top/bottom. The final red candle in pattern goes know higher than itâs entry top of star body. (strong signal)
The price over the last few hours has stuck to the top of the Bollinger Bands , and the last hour to the top lineâŚ
Bolinger band is starting to straighten. The top line is pulling down.
my stop 108.12 2 pips plus 2 for spread above highest point in pattern.
This pattern looks great for short. The long lower wick on 3rd candle is a little worrying but not with other signs. The price following the upper Bollingerband channel then the top line.The top B.B. line hooking down.
I tend to mostly agree with Kenneth, except the hook down on the BB. It looks to me like itâs going up. I would have my stop in the same place, 108.12.
The wick on the third candle plus the BB licking up at the very end suggest a possible retrace first trade.
Although the candles are walking close to the upper band, it is not trumpetting, so i think the evening star is valid. The long wick of the red candle is a little worrying but the body does close more than half way into the first candle.
Without the 5min chart for reference, I would enter at the close of the red candle, stop loss at the top of the evening star + 2 pips - 108.10.
Sorry about last postâŚi was having a bad dayâŚshould of taken a few deep breathes first. Anyway thankyou tonymand i am following your advice, and Tymen thankyou, it is because of you i am getti ng betterâŚjust not ther yet!
My answer is that at the close of the third candle in the pattern, i would switch to the five minute chart that i have setup already to determine my entry depending on the price resultant (MACD/MID BOLLINGER BAND),on the five minute chart.
My stoploss would be placed, from what i see on the 25minute chart. As the price has been rising steadily for 3 to 4 hours i would place my stoploss at the highest risk at 3 pips above 108.08 ,ie [B]108.11 stoploss[/B].
I would take the trade as it is a good/sound evening star pattern and the bollinger band isnt trumpeting but the rise has been steady, but sometimes in this situation a second pattern will result in the price going down and the first just send it sideways.
Anyway i await the 5 minute chart now to determine my entry point/price.
PS. I wish you didnt tell me you were successful on this one till the end, as we know the pattern is going to be successful. (not sure it matters thoughâŚ)
It is pleasing to see that several readers are participating in this trade!!
As a retired school teacher, I can tell you that this is the best way to learn - by putting your neck on the line.
[U]There is much more to be gained from active participation rather than just passive looking at the thread from home and not contributing.[/U]
Looking at the candle pattern shows that it is promising even with the long lower wick on the 3rd candle.
The BB is a problem though.
We have had a whole number of green candles walking the upper BB. There is only one other red candle and it has had no effect on the walk upwards.
The BB width has remained constant with the whole band system rising steadily. :eek:
There is nothing on the chart to indicate that the BB direction or width is going to change.
It is all up to the candle pattern.
[U]At the time of trading[/U] I suspected that the price action, at best, would break and travel horizontal. A second pattern would be needed to send it down.
Even so, the pattern is good, and some downward price action could be expected.
So lets wait and see what happens.
So, for me, its the stop loss at the high risk position - 3 pips above the top of the âstarâ.
That makes my stop loss 108.08+0.03 = [B]108.11[/B]
To be on the safe side, you could put every stop loss at the high risk position.
But I will show you a better way in the NEW TRADING METHOD to follow.
Below is a 5 minute KC chart of the trade.
It shows the Bollinger bands in blue and the three Keltner bands in orange.
The Keltner bands have been shaded grey for your convenience.
A Di Napoli MACD is shown in the lower half of the chart >>>
