THE JOY OF CANDLESTICK TRADING - a Learning Experience

[jlmac27]

I am disapointed to read that conversation you had with them.I hope this isn't something new to come to Oanda.I have been in trades as little as 20 seconds and jumped out without a problem.How frequent do you trade?I average about 4 trades a week.Maybe you trade more and that is what catches there eye.HMMMMM....I picked Oanda because of there integrity as a broker I hope I don't have to leave them if I run into problems.I was with GFT before them,but they don't offer micro accounts.So I learned as I became more educated that I needed to start small....Good trading

[tymen1]

To Max99 :

Thank you for the encouragement.

Yes, 15 mins is really too short - even 20 mins is about borderline, i think.

I deal with the 4 majors with time frames from 20 mins to 1hour. Thats 9 time frames for each pair - a total of 36 time frames to look at. Added to this I have 4 time frames for USD/JPY and AUD/USD. Thats 8 more, a grand total of 44 time frames.

With so many time frames, its easy to find heaps of candlestick patterns. Therefore, I pick only the best ones.

It would be great if you can do the same with Metatrader.

[tymen1]

Ok, on with that chart.

We were supposed to enter short (always short on an evening star pattern - thats the way it is traded), at the lower KC band. But we are already above that band making for an even better short.

The question is......should we wait for an even better entry?

Well, my experience is..........that no sooner do you get greedy and start waiting ......suddenly the price plummets downwards and you are left in the lurch. You are now some 5/6 pips down and .....oh, if only, if only

You must stick by the rules : in this case entry is at the lower KC band. If you in a better position than this then enter now! Do not wait.. Count yourself fortunate - a bonus.

Next 5 min chart with notes below >>>


By tymen1 at 2008-03-27

We entered short immediately at 34. The price indeed rose a little and by waiting we could have entered short at 39. But the rules say to enter at the lower KC band - that means immediately on this chart.

Because this prediction method with 5 min charts works accurately, we have absolutely no guarantee that the price will go any higher - and in most cases it drops sharply to our horror.

A scalp in this case, therefore, from 34 to 16 (on the chart) is 18 pips. I usually go for 10 at high leverage.

END OF EXAMPLE

[tymen1]

Just a short break before our next example.

I have not yet touched on stop losses - that is to come.

Not all evening stars work - some fail. Look at the chart below >>>



By tymen1 at 2008-03-27

In this case we have 2 evening stars (highlighted) and the first one fails, ie the price action keeps going up. Even though we get a good entry on the 4th candle (green), the price keeps going up and eventually our stop loss is activated.

These cases, however, tend to be in the minority. The second evening star, (not quite a true evening star) although short of the BB, sends the price action down.

[tymen1]

Now for another example. This one was taken only 3 days ago.

It is a 20 minute chart of EUR/USD, one of the 4 majors. I pay a 3 pip spread on this one.
How much do you pay?

This trade is a splendid example of the reliability of the MACD/BB/KC 5 minute entry system.

The chart shows an evening star pattern so we are looking to trade short and get the best entry on the 4th candle >>>


By tymen1 at 2008-03-27

The chart shows an evening star located on the upper BB. The Bolinger bands are in royal blue.

The 4th candle begins (vertical line) at 29 at the time of 5.20 am. (shown in pink).

The upper candle wick extends to 34 (it actually pipped 35) and we would like to have that entry to go short from. (shown in pink).

The long red arrow shows the direction of the trade going short.

Lets go to the 5 min chart.

[tymen1]

Here is the 5 minute chart.

Remember, we go to this chart as soon as the 3rd candle of the evening star is complete >>>


By tymen1 at 2008-03-27

This chart shows the begin of the 4th candle (29), the BB in royal blue, the KC in full grey with the middle band in yellow.
The MACD is at the bottom.

The vectors are drawn on the indicators. They are labeled. Can you see them?

The vectors are also shown on a separate vector diagram.

The BB is going up and the MACD is going down. Consequently, the resultant (the price) is going level.

This means, according to the rules, that the best entry we can get will be at the middle Keltner band (which is in yellow).
It is not there yet so we wait.



Thats enough for now - next exciting episode tomorrow. Don't miss it!

[jlmac27]

Just wanted to send you a thanks!You are putting a lot of time into this and it is great how you are teaching it.Keep up the good work!!!

[VulcanClassic]

Pips To You Tymen,

I made 83 pips today using these entries. Keep up the good work!

[tymen1]

Originally Posted by VulcanClassic

I made 83 pips today using these entries. Keep up the good work!

Good for you VulcanClassic - I am so glad you are doing this well!
Hopefully you will continue to make good profits.

To jlmac27 :

Thank you for your continuing encouragement. I hope you are doing well too!

Yes, the charts take a long time to produce but its worth it if there are people benefiting from it. I hope I am contributing something useful in the forex business and my teacher training is helping me do it.

[tymen1]

And now, the finish of the EUR/USD trade.

Here is the next 5 minute chart. Notes below the chart >>>


By tymen1 at 2008-03-27

The level resultant shown in both this chart and the previous 5 min chart tells us that the best entry is at the middle KC band (yellow).

The previous chart showed the begin of the 4th candle at 29.

We must wait.

By waiting we see the 4th candle grow from 29 to 34 and hence go a hairs breath above the yellow middle KC band.

Time to enter short - now

Lets see what happens in the next chart.