THE JOY OF CANDLESTICK TRADING - a Learning Experience

[tymen1]

Marks allocation :

I will now mark the exercises, not to be the big conceited school teacher, but rather to give useful (hopefully) feedback as a reward to those who took the trouble to answer the questions.

Exercise 4 carries 6 marks. Questions 1+3 are worth 2 marks each.

Exercise 5 carries 5 marks. Questions 4 is worth 2 marks.



Sinn1 ;

ex 4 - 3 marks
ex 5 - 5 marks - good work!
Total 8/11



Vulcan Classic ;

ex 4 - 4 marks
ex 5 - 3 marks
Total 7/11



Kenneth Lee ;

ex 4 - 5 marks
ex 5 - 3 marks.
Total 8/11



Ericoco ;

ex 4 - 6 marks - well done!
ex 5 - 3 marks.
Total 9/11


The best trick with these questions is to number the answers corresponding to the numbers of the questions, eg if there are separate 4 questions, then give 4 separate answers.
Be very specific with each answer - do not be vague.
Remember, you cannot be vague when you trade!!


Thank you to Sinn1, Vulcan Classic, Kenneth Lee and Ericoco for posting answers to the exercises.
It makes this thread worthwhile, and others who did not have the courage to post answers may learn also!


I will now continue the theme of this thread.

[tymen1]

Delete Notice

Before I continue the theme, if either Sinn1, Vulcan Classic, Kenneth Lee or Ericoco or any other reader is unhappy that I marked the exercises as above, then I am happy to delete the post as a matter of respect.

[sinn1]

Hi Tymen,

I'm sure the others will agree that your marks don't need to be deleted and your feedback on the exercise was appreciated.

Please continue with the lessons. I'm looking forward to reading what else you have at your disposal, especially how you trade other candle stick patterns.

Thanks

[KENNETH LEE]

Tymen; It perfectlly fine to post results. I am sorry about execrise 3 I really didn't see it.. Thanks for all your help and effort here. Ken

[tymen1]

OK, now a final set of posts that will lead straight to the FINAL TRADING METHOD.

These 9 posts following will take the form of exercises.

This series of 9 are the stages in trading a particular evening star pattern.
I traded this pattern myself and made an excellent profit on it.

I will not tell you when this pattern occurred because then you can then cheat and look it up on your program!!

Each chart is a trading stage and simple questions follow each one.

Try anwering them and posting your answers - the discussion is bound to be very interesting.

I will post one chart per day (9 days).
Each new post will also include answers to the previous post.

At the end of this I will post a drawing (already prepared) showing the final trading method.

After a short evaluation by readers of this method, we will then use it, amended or not, to start looking at and trading the engulfing pattern.

[tymen1]

Stage 1


By tymen1 at 2008-06-15

This is the main chart, USD/JPY, 25 minutes, of an evening star pattern that should be obvious on the chart.

This is not a theoretical exercise, I traded this one and made an excellent profit on it. So I am familiar with the decision stages.

See how you go!!

The question is on the chart.

Answers tomorrow, together with Stage 2.

[VulcanClassic]

No problem Tymen

[cupofjoe]

First of all Tymen, thanks for all the effort you have put into this thread, I have learn a great deal.

The first candle does not come close to middle Bollinger band which is a good sign. It extends into the upper band, which again is good sign. Strong first candle.

The second candle, has a small body, and goes fairly high into upper band and doesn't appear to retreat past mid point of first candle.

The third candle goes past midpoint of first candle.

Overall, I would give this a moderately strong evening star. The Bollinger band is rising at the third candle so I would set my stop-loss at a medium risk level. That level would be 1 pip above third candle body or 108.04.

[KENNETH LEE]

The star candle Green is a nice Possible retrace pattern equal wicks top/bottom. The final red candle in pattern goes know higher than it's entry top of star body. (strong signal)

The price over the last few hours has stuck to the top of the Bollinger Bands , and the last hour to the top line..

Bolinger band is starting to straighten. The top line is pulling down.

my stop 108.12 2 pips plus 2 for spread above highest point in pattern.

This pattern looks great for short. The long lower wick on 3rd candle is a little worrying but not with other signs. The price following the upper Bollingerband channel then the top line.The top B.B. line hooking down.

[VulcanClassic]

I tend to mostly agree with Kenneth, except the hook down on the BB. It looks to me like it's going up. I would have my stop in the same place, 108.12.

The wick on the third candle plus the BB licking up at the very end suggest a possible retrace first trade.