THE JOY OF CANDLESTICK TRADING

tymen1 · #**711** (**permalink**) 07-02-2008, 04:02 AM

Quote:

Originally Posted by neboxian

Thanks Tymen, Put on 5 trades today ... using the ultimate candle stick method ....the first one didn't go so well ....the problem was i jumped the gun on the retracement ....so by the time price fully retraced and just barley came back to me, i got out with a small 1 pip profit....that was great...didn't lose any $$....

The Ultimate Candlestick Trading Method appears to have a built in protection mechanism.

Well done!!
No pips lost!
No harm done!

Quote:

the trick i suppose is to be careful on the re-entry point ....i noticed on the 5m chart a reversal candle pattern will usually develop at the top of the retracement.... similar to the one on the main chart ... ...............................

I have noticed this too....but it is not always the case because the patterns developed on 5 minute charts are unreliable, that is, they do not nearly have the reliability of the longer term charts.

Patterns formed on a daily chart, for example, are extremely reliable.

Quote:

so the following retracements were entered at the point of a dark cloud, engulfing, or evening star on the 5 m chart .....and it went very well..

So I take it that you short entered when the price started to go down again.

It is best to get as close to the top of a retracement as you can.

Posting some pictures/charts of these entries would be of great interest to us all and make a good discussion point.

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made a total of 70 pips on 3 trades

That's 23 pips per trade - well done!!

I have yet to see that sort of consistency from the indicator traders, with such a short learning time!!

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Took a 10 pip loss on the final trade ...I got stopped out and then price immediately ran the correct direction and left me wishing i was still in the trade

This can happen even to professionals.

Oh dear,........ a huge, massive, tremendous, gigantic loss of.................10 only pips.

Your risk/reward ratio is completely intact.
At 23 pips win and 10 pips lost we have 10:23 = 1:2.3
Excellent!!

Quote:

also, another helpfull tip i discovered, is if an evening star starts to develop on the 20m chart, I will wait for it to develop on the 30 or 35 m chart before i go in.....the pattern seems to work better once it develops in the higher time frame...

The pattern will develop quite differently on a higher time frame. Be careful here. As I said, higher time frames are more reliable.
But when the pattern has formed on you chart, and it is a quality one, with the BB favourable, then it is time to enter.

Quote:

wow!!! what a great method you have shared with us....Thanks!!!

Glad to be of service to you Neboxian!

It looks like you are really understanding the system and how it works.

Now continue to soldier on and we will soon be considering a new pattern, the engulfing pattern.

tymen1 · #**712** (**permalink**) 07-02-2008, 05:09 AM

The time has now come to show the Starc bands and entry points in pictures as I have promised >>>

By tymen1 at 2008-07-01

This picture shows the Starc bands going up,level and down.

Retrace points are shown in blue.
Exits are shown in red.

The dots represent the most likely points. The larger dots are the highest probability.

The arrows with the 1,2,3 are walkings of the bands, either touching or some distance away. The numbers are the candles........1st, 2nd and 3rd on the band walk.

I have kept the drawing simple, without clutter.

You may find it useful to print the picture for future reference.

tymen1 · #**713** (**permalink**) 07-02-2008, 05:53 AM

Quote:

Originally Posted by cbarnett808

Risk/ reward would be a wonderful next topic.

This is the only major shortcoming I see in trading candlesticks. I have a hard time scalping for 10 pips when my stop loss (the high point of the formation) could be 20 or more pips away. In fact, I have had great success trading candlestick formations alone the last week or so, but I'm actually at a net loss due to big stop losses (Yes, I realize big risk/ small reward breaks a prima facia rule of trading- I like breaking rules though, and sometimes it pays).

.................................................. ....

The point of this post is this:

We have a very solid system here- better than any i've seen yet. We might need some solid money management that is somewhat specific to this system however, and here is why: If we assume the 27:7 win-loss ratio (which seems unrealistically high) and we gain 10 pips from each win and lose 20 pips from each loss, we don't even clear 100 pips for six weeks after we pay the spreads. True enough, we haven't lost any money, but we certainly haven't expanded it much either. Plus, I should add that many of the 27 wins were just barely 10 pip gains (another achilles heel), and that ratio is certain to decrease sooner or later.

If we can get money management straight, this system ............. may be as close as we get to a holy grail! I've tried other systems that have great money management rules but were mediocre otherwise.

Behold this very important post.

It was post #325 made by Cbarnett808 and can be found on page 33 of this thread.

It was the post that made me decide to go on a pilgrimage to search for a trading method that would have a consistently positive risk/reward ratio.

Up till this time we had only looked at scalping trades, always exiting when the trade was in our favour.
There is nothing wrong with that approach as such, if you always exit when the trade is winning for you. In fact, that way you will never have a loss.

But when searching for greater numbers of pips, rather than just scalping, losses are a possibility, and thus the search began to deal with the risk/reward ratio.

In this search we have considered many things. Better entries, multiple lots, where to place stop loss orders and, of course, the fluctuations which result in pullbacks or retracements.
Suitable time frames have been chosen to develop a method that will handle all situations and still keep the risk/reward in our favour.

I believe we have now found that trading approach and I call it the Ultimate Method for Candlestick Trading.
It can be used both long and short.

* * * * * * *

Therefore, I consider it now appropriate to bring this long search, with all its relevant posts, to a timely END.

I now declare this part of the thread, starting from page 33 to be now CLOSED.

* * * * * * *

We will now use the Method, as developed, to go on in our trading.
We will now look at a new pattern, the going long engulfing pattern, by popular choice.

At this time I am going to take a short break of a few days, time to rest from this exhausting work, time to prepare new material.
And above all for me, time to do some of my own trading as well.

See you all soon, keep posting in the meantime.

trav72 · #**714** (**permalink**) 07-02-2008, 06:25 AM

Excellent Tymen. Feel i have learnt so much cause of this thread. Definitely my foundations are being built here. I do feel i can perform as required to make the system work.
Problem i have is the pschology of trading that i am working on, as i tend to get ahead of myself. I am patience an execute properly for a trade or two and generally am successful following the methods learnt here. My problem is i then get excited and break every rule...its me....so i am still doing demo until i can get myself sorted....think iiii.....think ......iiiiii...think...iiii will get there........

Anyway thanks for all this great stuff, and you definiately deserve a well earned break, but i am looking forward to seeing you back here asap for the LONG EGULFING pattern. I am fascinated to see how it is all going to work!

I love those SL rules....they are GREAT!....i could feel/sense that it was there, this brilliance, but i couldnt quite get it. I was figuring an early exit on the retrace was better than waiting to renter, but i still couldnt quite get it but NOW we have THE Ultimate Method for Candlestick Trading. I knew you were taking us somewhere, but when it finally came it was like. AHA....THAT IS IT!!!...WAHOO!

jerryd_99 · #**715** (**permalink**) 07-02-2008, 10:56 AM

Hi Tymen. I have read your thread here over the last week and am very impressed with your teaching style and with this method of trading. I have never felt the need to post on any forum before now, but I want you to know that there are those of us "quiet ones" out here that truely appreciate all you are doing here.

I have started trading on a demo account and have had mixed results because I am so anxious to trade I forget to be selective in my choices of candles. The up side is that when I do make the smart choice I am amazed at how things work out. And when I make a not so smart choice I am aware of why it doesn't work out. I know with patience and time that I will be able to make more right choices and I have you to thank for that. Thanks for this wonderful method and don't feel that the lack of responses from out here is in any way indicative of the support you have for this terrific method of trading.

I will be glued to this thread for any and all future posts.

Jerry

neboxian · #**716** (**permalink**) 07-02-2008, 11:14 AM

Is the new Starc band graph based on the main chart or the 5m chart?

VulcanClassic · #**717** (**permalink**) 07-02-2008, 12:00 PM

Tymen,

Have a good break.

I take it those dots represent short positions only?

KENNETH LEE · #**718** (**permalink**) 07-02-2008, 01:28 PM

Tymen; if anyone deserves a break it is you, This thread is far and above the best designed and executed I have seen. I am sure there are alot of other folks reading your thread that don't chime in. I was like that for along while , Don't want to look the fool. But you know as well as We have been told our entire lifes there are no stupid questions, except the ones we don't ask..

Hope you have a great time off and don't spend it all working on this. Have a day or 2 at the beach ( oops forgot it is winter down there) anyway have some fun. Life is to short not to enjoy it.

We will be waiting for your return.. Take Care Ken