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I want to broaden my range of opportunities for trades. I am looking again at D1 outside bars. These are not going to be found every week but with a tight profit target they have a good win rate.
The trades I will be taking are all from pending entry order, not real-time buys/sells. The set-up bar is an outside bar, having a high higher than yesterday’s high and a low lower than yesterday’s low. But I also need today’s close to be above yesterday’s high or below yesterday’s low.
Looking at a bullish outside bar, with a higher close than yesterday’s, I set an entry order at today’s high, stop-loss at today’s low. Take profits at the first profitable close after the entry order is triggered.
An optional tactic would be to set a sell entry order at today’s low. If the buy order is not triggered but price falls through the sell order price, a short trade will be opened: again, take profits at the first profitable close after entry.
These tactics break several rules -
trades taken ignore underlying trends, support, resistance and every other TA feature
risk:reward is negative
entry to stop-loss distances are very wide
But win rate is very good.
On win rate, I can post some encouraging figures.
Primary signals (buy after a bullish outside bar close, sell after a bearish outside bar close) = 73%
Secondary signals (sell after bullish trade stopped out or not triggered, buy after bearish trade stopped out or not triggered = 85%
Aggregated win rate = 76%
This is good enough for me to put in some trialling.
There’s no ‘best’ candlestick pattern. One will not apply to everyone’s trading scenario and type. It is better if the trader chooses his own best candlestick pattern that works most of the time according to his trades.
If you think that there is some kind of best candlestick pattern, you are making a big mistake. As everyone is unique, and so are the trading strategies, therefore, the best candlestick pattern would be different for different people. It is therefore recommended that you become aware of your own trading world; others might only guide you. You can only take inspiration from them, but at the end of the day, only you need to decide and work on that.
Some candlestick patterns are better than others but they’re not the be all, end all in trade decision-making.
Top of the list as a factor whether you will be profitable or not is style - as a new trader if your style involves looking for reversals out of mature trends on a 5 minute time-frame you’re going to lose money.
Secondly strategy set-up - this will identify the high probability trades that you can take, reducing the number of losers and shortening the time to takes for a winner to hit target. For example, getting short on a bearish candlestick pattern into a consistent uptrend which you did not notice is going to be a loser more often than not.
The least important factor is entry pattern.
Don’t follow any trading pattern so blindly; you have to understand the full context! Trading patterns are valueless without the market context!
I don’t think there is a best pattern when it comes to reading charts. You have to identify a pattern and make decisions based on your strategy and trading plan. At what point you enter or exit trades is totally upon how you analyse and interpret the candlestick chart.
I like Doji because it’s simple.
The W candlestick pattern works best for me. I am able to earn money most of the time by employing this pattern.
I think that depends on the currency pair you’re trading . I trade Aud/usd and three line strikes are super common and relatively accurate