Here we have a fully expanded view of the 5 minute chart >>>
By
tymen1 at 2008-05-21
This chart shows the 3 Bollinger bands (blue) and the Starc bands (grey filled). The middle band is not necessary for this instruction.
This chart is involved and I will go thro it step by step.
1) We enter short at the black line on the left of the chart with
1 amount at price 66 using the KC method.
2) The price goes up and we declare a "
retrace first" trade. The Starc bands also go up.
3) With the Starc/Keltner going up, a retrace must, by definition, tag the
upper Bollinger band. The price does just this after a long green candle. We are now not far from our stop loss.
4) At price 88, the
2nd amount is short entered. The computer averages this to price (66+88)/2 = 77 for entry.
5) Still at price 88, we
frown because the price has to go down to 77 before we even begin to make a profit.
6) However, the price does go down (long red candle) and, to our annoyance, it goes up again (roller coaster ride) to point A.
7) At
point A we already have our 2 amounts in trade so we must grin and bear it.
Oh good! The price goes down again to point B at price 71.
8) At this point we think - 77 entry minus 71 is only 6 pips. Lets forget about it and stay in the trade. Out of curiosity we click over to the
main chart.
9) To our surprise, the main chart shows that
another dark cloud cover has formed!! This gives us confidence that we will most likely see a good profit. (you will see this extra dark cloud on my next post).
10) Turning back to the 5 minute chart, we
weather the storms and watch the price action going down thro the middle Bollinger Band.
11)
This seems a good point to cancel our stop loss and reset it to 74 pips. (77 entry-3 pips spread = 74).
If the price now retraces, we make no loss, no profit.
We continue and arrive at point C, at price 67.
12) Now price 67 is 10 pips less than entry 77. We could, if you like,
exit 1 amount here for a profit of 10 pips. The choice is yours.
13) The Starc/Keltner bands are going
down now, therefore, by definition, a retrace must be a tag of the
middle Bollinger band. This occurs at E.
14) If we did a 1 amount exit at D we could re-enter that amount at E. Or do nothing. The choice is yours.
If we did no exit at D, we have to remain in the trade.
15) The price action then drops to F at 57 pips, 20 below our entry. What you do here will depend on what you did earlier.
If you still have 2 amounts you could exit, ie 2x 20 pips = 40 pips.
If only 1 amount then 1x 20 pips + 1x 10 pips = 30 pips.
There are more combinations available. The choice is yours.
16) You could also exit one amount at F for 20 pips and then leave the remaining amount for the "final exit". Doing so will get you some 30 pips giving you a total of some 50 pips.
END OF TRADE.
Linear Mode
