THE JOY OF CANDLESTICK TRADING - a Learning Experience

[tymen1]

Answer to Stage 3

Congratulations to all who participated - everyone was correct!

Originally Posted by tymen1

Stage 3
The question

We see that, as the entry candle developed, it dropped from 92 to 88 at one stage.

a) Would you have exited at this point and called it a "pips first" trade?

b) If yes, why?
And if no, why not?

a) No !!

b) The price action is merely going thro the middle Starc band, not the lower Starc band.
If the price action had passed thro the lower Starc band, then an exit would be valid and we could call it a "pips first" trade.

[tymen1]

Stage 4

We now move on and the trading starts to show action >>>


By tymen1 at 2008-06-15

The question is on the chart.

Unlike live trading, you can take your time here. So think carefully.

Points you might consider..............

What do I do with that Starc band?
When do I enter that 2nd amount?
Do I enter a 2nd amount at all?
Shall I bail out?
Is this a "retrace first" trade?

Remember the method or strategy!
Remember that you are looking to make a profit!

[sinn1]

I would get out at -10 pips.

I will look for a retrace top where the price crosses the upper starc band and upper bollinger band.

I will wait for the price to 'walk the upper bands' for 3 candles for my second entry of 2 amounts.

[sinn1]

I have question that is unrelated to the current exercises. If you have time to answer it Tymen i would appreciate it

How do you know when you're in a losing trade?

For example:

On a pips first trade
- you take your pips first
- you wait for the retrace
- you enter after 3 candles have walked the upper band
- the price continues to walk the upper band (but still below the large stoploss placed above the evening star)
- the price continues to rise through the stop loss

At what point do we call it a loss trade and cut our losses?

One way i'm thinking is if the upper bollinger band is moving up and away from a risnig upper starc band. What do you think of that? (This is just something im noticing in a current trade i'm in now. I dont know for sure if its a definite sign)

Have you found any other sure signs of a losing trade?

Anyones suggestions would also be appreciated

[tymen1]

To Sinn1 :

You are in a losing trade when the price action goes thro your stop loss thus triggering it.

In such a case you will lose 2 amounts.

Yes, it is a lost trade, remember, there is always a risk of loss.

But a retrace, by definition, is just that - a top point. Passing tho the upper Starc band gives us a clue that the retrace is very near.
The Starc bands are an envelope around the price extremes.

However, there are some ways of minimizing the risk of losing a candlestick trade :

1) Always set your stop loss at the highest position - 3 pips above the star.
2) Always choose quality candle patterns.
3)Be very wary of that BB.

If the BB is going up dramatically, especially from a contraction point, then just don't enter.
Leave the trade alone. Its a high risk trade.
Yes, it might make a great profit. But you don't know that.
We are not here to gamble.
You want the odds definitely in your favour.

Following the above 3 rules should see you make a profit. With these rules, the retraces may come very close to your stop loss but are unlikely to trigger it.

In the unlikely event that your stop loss is triggered, well then, you have a loss.

The decision to enter a trade is made on the main chart, not on the 5 minute chart.

What things you see in the 5 minute chart that scare you is irrelevant. We go by the method that is set and stick to it.

[KENNETH LEE]

1 would enter second amount when price nears upper starc , Might even wait for it to near upper BB. line, with Starc pointing up.

To late to close with a porfit (plus I have a stop set for that.)

This is a retrace first trade.

Also 108.00 is a big number price likes to turn at big numbers..

Still looks short to me...

[VulcanClassic]

This is a retrace first trade. Hang on until price hits stop. Enter second amount if price exits then re-enters starc band.

Tymen,

What is the significance of switching between Keltner Channel and Starc Bands?

[tymen1]

Originally Posted by VulcanClassic

Tymen,

What is the significance of switching between Keltner Channel and Starc Bands?

The Keltner bands do better for the entry, although you can use the Starc bands if you wish.

The Starc bands are specially designed to mark out the price extremes. They do better at this than the Keltner bands.
If a price is at the upper Starc, then it has a high probability or returning to the centre. Same for lower band.

I find it useful to load the upper and lower Starc bands on my chart, together with a middle Keltner band.
This allows for both the entries and the retrace detection.

I use different colours for these bands (Starc = green, Keltner = orange).

[tymen1]

Well, it looks like time to Answer Stage 4

At this stage, it is definitely a "retrace first" trade.

We note that the Starc band is going up.

So we are not in a hurry to enter that second amount since the price action may walk the Starc band.
There is a small possibility that the price may hit our stop loss, but providing we set it correctly, that is unlikely.

At this point we just wait and see what happens.

[ericoco]

Tymen, are there any particular settings for the starc bands or do we just use the default settings?