THE JOY OF CANDLESTICK TRADING - a Learning Experience

[Airborne]

Tymen interesting discussion on those bands. Here is an example of what I posted last week. This shows a daily signal then a slip down to 4h to confirm the daily. This works on any time frame. I guess you could use the daily as the signal and the entry on a smaller time. Once signal is alerted the Vertical line is drawn, then again on the 4h. If someone was trading the high times then naturally your stops are not 20 pips away. Some might consider using a volatility stop off some ATR or below support. Like any trending system you never know when the trend will end.

Daily is like the heads up display and the 4h confirms the signal. Something like this is mainly for longer term positions or those who can not stare at the screen all day.

Sorry for getting off track and away from your main topic.

[jlmac27]

Thanks guys for the help.I was pulling my hair out trying to figure that out.But we are all set up now!!thanks!By the way Tymen I am grateful for this thread..I have been waiting for this...since christmas time!Keep up the good work.!

[jlmac27]

Originally Posted by tymen1

Now take a look at the following 5 minute chart. It is a chart of the previous trade which was a 25 minute chart.

The idea of a 5 min chart is to get the best possible entry after the evening star pattern has formed.

When the 3 candles of the evening star are complete (on the upper BB !!) and the 4th candle starts we then set up a 5 minute chart.

On the 5 min chart we set up the usual Bolinger bands.
We now also enter on it the Keltner channel.

The Keltner channel is a probability channel. Candles outside this channel are likely to stay outside and go up or down depending on the trend. The Keltner is based on Average True Range and, as such, is a volatility based indicator.
It is extremely sensitive to volatility and has very little lag to it.

Look at the following hyperlinks :

Capture Profits Using Bands And Channels

Trading the BSE using Keltner Channels

My settings for this Keltner channel are a little unusual - period 5, factor 1. This makes sure that most of the price action is inside the channel (intended).

The Keltner channel is shown shaded grey on the chart below. Further discussion on this post is below this chart >>>




By tymen1 at 2008-03-10




>>> As you can see, the middle BB is going down. The Keltner is also going down.
Price action is now going down and it is ,therefore, important to get in immediately ie trade short right now. No time to waste.

The time is 15.05 on both the 25 and 5 min charts, and , if you are really quick, you would get in at the 71 pip mark shown on both these charts.

These charts have taken a very long time to produce on Microsoft Paint. Emphasis has been given to clarity and ease of reading.

The purpose of the Keltner channel will become clear as we go along.

For now, note that a 5 minute chart with a Keltner now gets used to get precise entries.

One fast question, my KC comes with a default setting of period 10..I have switch it to 5 as you instructed,but I do not have a factor setting(Is this important?)

[tymen1]

To jlmac27 :

No problem if there is no "factor". It is most likely set at 1 anyway.


To Airborne :

Yeah, a little off topic. My reason for the Keltner bands was just as a tactic for fine tuning entries to the evening star candlestick pattern.

The evening star pattern is the important thing, keltner is merely secondary.

If you wish to discuss bands only as a trading method, maybe it would be better to open a new thread.

[tymen1]

Now another real life example to show the accuracy of using the KC-BB-MACD approach.

Notes below >>>


By tymen1 at 2008-03-17

>>> Ideally, to scale the vectors correctly, the main chart should be full size, then the MACD chart should be full size. This way you get the exact angles of the vectors.

Note that the middle BB (blue) is going down, whereas the MACD is going steeply up.

The resultant, therefore is nearly level, just a tiny bit up. So the price action which would be at the yellow middle KC band for a level resultant, is hovering just above the yellow middle KC for a resultant a tiny bit up.

Again, the predictions are accurate.

Next post, we will do a prediction first, then look at the final result.

[VulcanClassic]

Hi Tymen,

Still following with interest. I've got a couple of questions;

How far ahead can this vector method predict ?

Is there a valid entry if you have missed the bounce off the BB and it's already in it's trend ?

Jeff

[tymen1]

Originally Posted by VulcanClassic

How far ahead can this vector method predict ?

Is there a valid entry if you have missed the bounce off the BB and it's already in it's trend ?

Jeff

I would say at least 2/3 candles ahead. It basically highlights a mini trend.

Later I will show a fine tactic for prediction where 1 candle ahead is sufficient. The KC-BB-MACD system more than meets that requirement.

Sorry, I don't understand the 2nd part of your question - can you put it in different words.

[VulcanClassic]

Hi Tymen,

I've attached a chart (if I did it right)

See the slide down from the 2.0200 to the 2.0000 level. I woke up part way through that and missed the beginning of it, where it came off the top BB with a reversal pattern.

Hope this is clearer.

Thanks, Jeff

[tymen1]

To VulcanClassic :

Wow! Thats a drop of 200 pips is it?

I would really like to see the main chart before making any assesment.

It looks as though you have lost this one but I cannot be really sure untill I see the main chart.

[VulcanClassic]

Yes it was a pretty good move this morning.

I've attached a 1 hr and 5 min chart. That's the GBPUSD.
I'm just wondering if there was anywhere in the 5 min chart that I could have entered once the drop was underway.