THE JOY OF CANDLESTICK TRADING - a Learning Experience

[tymen1]

Chart 14 - Final >>>


By tymen1 at 2008-10-15


On this chart I show the cleaning operation.

The 2nd amount take profit order is still on the chart and it must be removed promptly.
If left there, we could unknowingly start a new trade.
This new trade would not be in our best interests.


So in this trade we only make 10 pips profit.
Still, this is better than making a loss.

Sure, we took a long time to make that 10 pips.
But lets not be greedy.
Not every trade turns a million pips in 5 minutes!!

We must learn to take the good trades with the not-so-good ones.
Be humble........and.......be thankful.

I just had another and updated look at our trade.
After the trade was finished, the price action started a long and massive downtrend.
It never came within a bulls roar of the 2nd profit target.

So if we had traded just one amount, we would have lost that trade completely.

The price action would have range traded, then gone on to hit our stop loss.

So you can now see the power of the Multiple Amount Strategy on this Basic level.

[tymen1]

STATISTICS

The Strategy

Basic level
Multiple amount trade.
1st amount - 5 mini lots.
2nd amount - 5 mini lots.



The trade

EUR/USD
20 minute candlestick chart.
Morning Star pattern.
Bollinger bands added.
Program used - GFT Dealbook.
Magnification - 72
Long trade.



Times

London open.
New York open

Traded at.....
Perth – 11.20 pm.
GMT – 3.20 pm
New York – 11.20 am
Los Angeles – 8.20 am
Sydney – 1.20 pm



The Figures

Entry - 1.3673
Exit 1 - 1.3686
Exit 2 - 1.3726
PCI - 1.3620
1st profit 10 pips.
2nd profit 53 pips.
Total 63 pips.
Reward = 63 pips.

Maximum price action before reversing 1.3688
Maximum profit potential 2nd amount 0 pips.
Maximum profit obtainable 10 pips.

Distance from entry to PCI - 53
Risk 53 pips

Risk/Reward = 53/63 = 1.19
Maximum Risk/Reward = 53/63 = 1.19
Average Risk/Reward expectancy = 1.0

[ihatemy925]

Tymen,

My first post in your epic thread. Thank you for your time and dedication. I have read all 100+ pages and have a good understanding of the strategy and style of the system. I have used it for about 3 weeks now on my demo account and have had good success. However, here are a few things that I struggle with:

I have mainly been trading the evening star pattern...

1. Trading opportunities - On a 30 min time frame they have been few an far between, sometimes only once or twice a day for the Evening Star on the upper BB. If I miss the entry due to my regular daily activities I have to wait for it to crawl back up to the upper BB, which can take hours.

2. Exits - I ussually have a great entry and everything goes to plan, however I find myself watching the trade turn around and end up breaking even alot. Sometimes the entry candle is all I get out of the trade and then it climbs back higher. Its frustrating because other times it'll drop off the map. I should master the 2 trade entry to secure the initial pips and then either break even or let it ride on the second trade.

3. Reversals - After trading an evening star pattern and a large green candle follows a clean staircase of reds I read that as a morning star and make a "buy" trade only to find out the reds take back over making the lonely green candle some sort of a 'continuation' pattern and my trade ends up bad.

One more thing...on the last example you traded a Morning star and it didnt turn out too cleanly, but ended up working out. How long do you wait before you say to yourself, "The morning star didnt direct the action as planned and now the action is all over the place and the morning star appears irrelevant, I'm going to get outta this one."

Maybe a better question would be: If it never hit your first profit target, would you ride it all the way to your PCI s/l and take the hit?

[tymen1]

Originally Posted by ihatemy925

Tymen,

My first post in your epic thread. Thank you for your time and dedication. I have read all 100+ pages and have a good understanding of the strategy and style of the system. I have used it for about 3 weeks now on my demo account and have had good success. However, here are a few things that I struggle with:

I have mainly been trading the evening star pattern...

1. Trading opportunities - On a 30 min time frame they have been few an far between, sometimes only once or twice a day for the Evening Star on the upper BB.
..........................

Thank you for your very interesting post Ihatemy925 and welcome to this thread.

I will answer each one of your questions.

1) Trading opportunities

The solution here is simple.
I trade 4/5 main patterns - evening star, dark cloud, piercing pattern, engulfing (long and short) and 3 green soldiers.

Not only that but I use time frames 20,25,30 mins..........1 hour.

Not only that but I trade 6 different currency pairs (4 majors + 2 locals).

That is 54 charts with a choice of 4/5 patterns on each.
With that kind of intensity, a trade can be found almost anytime.
For example, my trade examples were found immediately, traded and screen printed straight away.

2) Exits

Which level are you using?
It sounds like no level and a single amount trade.
If that is so, then your trade is frought with danger.
As you could see from my last example, I explained what would have happened if 2 amounts were not used.

You must use one of the levels to be successful.
As you can see, this whole thread has been devoted to testing this stuff.

Statistics show that some 60% of candlestick trades will fail.
The only way to overcome this negative edge is to use one of the levels that are given in this thread.

3) Reversals

It is better to see the appearance of a green candle as the end of a trade, especially if it appears around the mid or lower Bollinger band.
So do not get too greedy and continue after the first trade.

You will need more experience before you can do linked trades.

Very important - The morning star is not so strong - better is the morning doji star.

Maybe a better question would be: If it never hit your first profit target, would you ride it all the way to your PCI s/l and take the hit?

This is the correct answer to your very last question.
A trade is not finished until it hits either the target profit or the stop loss.

I have had trades go within 1 pip of the stop loss and then go on to a great profit - in fact, I think there is an example of this very early on in this thread.

[tymen1]

HHmmmmmmmm

Missed out on about 6 good trades.

Too busy reading Prophecy Watch Newsletter!!

I will see how the trades go in a little while.

[ramon]

First of all a LOT of thanks to everyone posting on this thread, obviously a special thanks to Tymen...

I'm still on the post #278 so I'm sorry if this was already mentioned, i can't know yet...

But today I've found two occurrences of what I'm about to say.

After the evening star the price goes down as expected, thus making the profit intended, but after the middle band on the 5M chart it goes up crossing again the middle band and then crosses the band again going down big time.

This happened on USDJPY and USDCAD, I'm only practicing with a demo acc, and i made 90 pips out from both...

But what I wanna comment is the resemblance to the Elliot Waves. The evening star is the peak, followed by the first down 'A' that crosses the middle band. Then green candles rocket the price up quickly as do the 'B' line. Followed by the 'C' line as expected.

I've seen it twice just this morning! So, i wanna know if you guys with more time and experience have seen more of this pattern... this way we can expect the rising of the price just after the middle band (5 minute chart still!) and maybe long at the right place for extra profit... or just not don't selling...

or just seeing the second evening star on the middle band of the 5M chart as a strong signal for another short...

I'm really looking forward to the response of you, so you can correct the stupid things I could have just said, and so I learn.



Cya,
Sorry about the english, I'm from Brasil and I don't practice enough.

[tymen1]

Originally Posted by ramon

First of all a LOT of thanks to everyone posting on this thread, obviously a special thanks to Tymen...
....................................
But what I wanna comment is the resemblance to the Elliot Waves.
...............................

......................................
or just seeing the second evening star on the middle band of the 5M chart as a strong signal for another short...

To Ramon :

I need to take your post in hand immediately.

Firstly the Elliot Waves.

Forget them!!

The success rate for prophets of Elliot Waves is approx 17%.
Do you like that?

Elliot Waves have absolutely nothing to do with Candlstick trading.
You are mixing apples and toadstools.

Stick with the material presented in this thread - it is logical and will not steer you wrong.
Towards the end of the thread you will come across a PDF file containing the 4 levels of candlestick trading.
I encourage you to start with the Basic level and gain competancy from there.


Secondly, you should not be using the 5 minute chart as your trading chart.
It is only used in the Int/Adv levels with the Starc bands.

You should be using the main chart to trade.

Seeing what you think is a pattern in the 5 minute chart is totally irrelevant.

Please stick with the methods shown in this thread.
They are taken from proven practices.
Do trust that I know what I am talking about.
It you start to trade your own way with the candlesticks you will go wrong and eventually lose all your money.

Finally, if you go to page 140 and post #1393.......you will find the fully updated and complete method explained in a PDF file.

This is your best start to trading properly.

[relaxiom]

Well, here it goes....

Ultra newb to posting on any forum, to FX and have a newb. So between lack of sleep & info overload (and trying to type with one hand due to the babe in arms) I apologize in advance for typos and my likely dense qeustions!

First off, I must also state how incredibly impressed I am with this thread & you, Tymen, due to your tireless efforts to teach - with simplicity & clarity, sincerity, dedication, & infinite patience with your students (us). You must have been that 'one' teacher that made a difference in many students' lives! A true teacher is always a teacher and does so just for the joy of teaching. (Unlike those who only give with the intention of getting something in return down the line - got sort-of friends/neighbour like that. I always dread their 'generosity' as I know I'll pay for it down the road...somehow.) And, on that note, glad to see you've come out the other side of last month's nonsense and are still willing to keep going - a TRUE teacher! Thank you for that.

Secondly, I need to vent! I hadn't yet read the posts with the email address for Kinetics and didn't want to call around the world (yet) but wanted to see what was so wonderful about Dealbook, so, against all advice in here and with serious misgivings I signed up with GFT, thinking 'how bad could they be for just a 30-day trial'? (Not that you can find THAT minor detail anywhere on their site!) Well part of their mandatory sign-up fields ask for phone # (not particularly unusual) and also best time to call (hmmmm, not liking this). So, I gave my cell # (don't want to be disturbed on the home phone if we & the babe are sleeping after a rough night) and best time to call as 'afternoon'. Oh, and I signed up for the demo around 10:00 at night. Well, the VERY NEXT MORNING at 8:05 a.m. they started calling me and on my HOME PHONE!!!!!!!!!!!! They have called AT LEAST 10 TIMES in the past 2 days!!!!!!!! And people wonder why we screen all our calls!! Needless to say, I'm totally NOT impressed with this company and I haven't even spoken to them! And, if I do, it won't be pleasant!!!!

That being said, Dealbook IS very sweet to work with. Oanda is easy to use but, as has been well noted, is overly simplistic ...... although, with your simplifications, it might be just fine .... Personally, MT4 (now that I finally know what that means) has wayyy too much of a learning curve for me and I couldn't find (didn't look overly hard) a decent tutorial or userguide. Sorry, no energy to spend on that right now and have no patience for software that isn't more intuitive/user friendly these days.

OK, enough rambling.....I have a couple of basic question about Dealbook and please redirect me if they should go on the UML or UMS or some other thread altogether.

1. In demo mode, can you set the lots to mini lots (as you recommend in Basic Level)? I can't find a way to do so, and the "Help" feature is the only complaint I have with the software so far - it's fairly useless.

2. And, along the same train, is there a way to change the leverage amount? It is automatically set for the maximum, I think, and I want to reduce it to demo in the way I would trade (if I ever get there, at this rate).

I have many more questions, but these technical details are driving me crazy at the moment, and the other Q's should probably be on one of the other 2 threads.

Thanks in advance.

[tymen1]

Originally Posted by relaxiom

Well, here it goes....

Oh, and I signed up for the demo around 10:00 at night. Well, the VERY NEXT MORNING at 8:05 a.m. they started calling me and on my HOME PHONE!!!!!!!!!!!! They have called AT LEAST 10 TIMES in the past 2 days!!!!!!!! And people wonder why we screen all our calls!!

1. In demo mode, can you set the lots to mini lots (as you recommend in Basic Level)? I can't find a way to do so, and the "Help" feature is the only complaint I have with the software so far - it's fairly useless.

2. And, along the same train, is there a way to change the leverage amount? It is automatically set for the maximum, I think, and I want to reduce it to demo in the way I would trade (if I ever get there, at this rate).

Thank you for your post Relaxiom, and the whole complimentary paragraph.
Pity you have these "user" friends, I know what that is like!!

I have carefully read your whole post, but for space saving, I have only quoted the necessary parts here.

I am horrified at the telephone calls - that is just being rude!!
I can tell you that Kinetic would not do such a thing, they have not called me yet, unless I have a specific need.

Now to your questions :

The leverage is set to 100:1 by default I think.
It is a good leverage and I suggest that you stay with it.
It is the leverage that I use.

You can ajust the lots yourself.
Open the Direct Deal Ticket and you can set your lots.
You can also set your lots when you open the "new order" icon.
Finally you can set the lots by default in the File/configure/parameters window.

Now get some sleep will you?
Trading without sleep is a one way road to making losses!!

[ramon]

wow thanks for the quick response!

I've read the new material and it's a great compilation, congratulations to both of you.

From now on, Elliot who? lol

Now a question for the meta trader 4 users, do you have any link to the STARC band download?

thanks again