THE JOY OF CANDLESTICK TRADING - a Learning Experience

[tymen1]

I am now going to proceed to candlestick trading proper. To introduce this we look at a trade comparison - going short ie going down.

Look at the below chart which displays a MACD and an evening star on the upper Bolinger band. (highlighted in blue).

Point A is where you would enter using the standard MACD.
Point B is where you would enter using the evening star candlestick formation.





By tymen1 at 2008-03-05





The difference is dramatic - a 30 pip difference. If you were scalping as I do then this indeed makes all the difference. With the MACD you are efectively missing out on one complete candle - and on some trades this might be the only candle that goes down - it could go up from here on.

In other words, the trade could well be all over by the time the MACD says to enter.
With candlestick trading you can be in and out of this trade even before the MACD devotee gets started.

Time delay in indicators is a fact.


Comments/rebukes/correctons invited.

[dwhite13]

Is a place that I can see Patterns of candle sticks and it says long or short for the patterns?

[Max99]

Originally Posted by dwhite13

Is a place that I can see Patterns of candle sticks and it says long or short for the patterns?

This is an excellent site previously posted by Tymen, so we can thank him for that.

Japanese Candlestick Charting Explained

[Max99]

Tymen,

Entries seem to be a problem for me. With the evening star do you enter at the low or close of the previous bar? Or how about waiting for a little more confirmation and enter 2-3 pips below the low or close? I’m not sure if that would be necessary though.

Do you like the 3 inside/outside, up/down patterns? I have found these to be very reliable, but again, I sometimes screw up the entry and get in too early and it goes against me or I get in too late and miss out on some pips.

Thanks for all your help,
Max

[concept]

So is it possible to use candlestick trading for any time frame? Right now I got 3 windows open... 30min/1hr/4hr on the EUR/USD(I am really just getting the hang of MT4 atm).

Are some patterns going to be more reliable on a longer time period(I am just looking at the 'highly reliable' patterns from the website)?

Im learning lots, but its all hard to digest without seeing the patterns in action!

Thanks for the information!

[tymen1]

To Max99 :

Entries will be a main focus starting after the next chart. I hope you will find it rewarding and solve your entry problems.

To Concept ;

Keep soldiering on! See if you can find any evening stars on your charts. Make sure they are on the upper Bolinger bands. You should see the price action dropping after the star ie going short.

It is best if the price action has been making a steady rise or walking the BB just before the star appears.

[tymen1]

Before I start looking at entries I will once more show the importance of locating your pattern on the Bolinger bands.

On this chart we see an engulfing pattern. It is red and this means to trade short ie down.

But the red engulfing pattern is not on the upper BB - and look what happens. The price action just continues to rise !!




By tymen1 at 2008-03-06

[concept]

So a few pages back you were gonna show us how to Post pictures and whatnot... I cant find it? lol I wanna see if I got the right idea of what you are talking about.... seems to like I might have a bit of a evening star on my hands. Its on the upper band, just waiting for it to close and see where it leaves me.
If you wanna take a look ( I can't post pics yet...) Its on the 4hr EUR/USD ... 2008/03/07 0:00 atm.

Is that the right idea?

[Summerpip]

How to put charts and thumbnails onto your post - the easy way

[tymen1]

Thank you Summerpip.

I hope you see the hyperlink, Concept, then you can see how to post the pictures.

Since our time zones are so different, I cannot easily look at what you are refering to. However, it you post the picture, then we can analyse it to your benefit.

My next post will start on entries.