Indicators For Scalping, please post here

Trading Discussion
23

Well here it is :

I have finally got my act together and can now explain, with charts, my ideas for candlestick trading.
All these ideas are [B]experimental [/B]and subject to extensive modification.

But nevertheless, as you will see, candlesticks work.

I am trying 3 principles for trading :

  1. Find the [U]pattern [/U]on any one of a number of time frames.

  2. The pattern must be on or above the [U]Bolinger bands [/U]so that they are extreme giving an extreme entry and looking for the price to return to the centre.

  3. Use a [U]staged entry [/U]by dividing the investment into 2 parts. If the trade is looking good (going to the centre) then the 2nd part is not needed. If the trade is going even more extreme (to the outside of the BB) then the 2nd part could be added.
    In that case, your computer averages the entries to give one good entry.

[B]Notes[/B]
a) The outline of this trade is detailed and will require more than one post.

b) The [U]stop loss [/U]is replaced by the Bolinger band. You do not set a stop loss as such but, because of the extreme entry, the Bolinger band limits the amount that price action is likely to go against you.

c) I am using a “standard lot”. The 1st part is one standard lot and the 2nd part is another standard lot. You can use any amount you wish - just set aside 2 parts.

c) My handling of the following trade was very poor. I started out in total error and more errors were made. Even so I made a profit in the end. Candlesticks appear to be forgiving.

d) I explain the errors and I think much can be gained from them.

[B]The trade :[/B]

The trade was made going [B]long[/B].

I found (or thought I found) a [U]morning doji star pattern [/U]on the 20 minute chart of AUD/JPY and this I chose to trade. The time of trade I will give upon request - just tell me where you live.

Now the first chart - and look at those errors !!


By tymen1 at 2007-08-30

Firstly, I did not look properly and the "pattern " is nothing really. Anyway, I entered the trade and got stuck with it. But [U]it is [/U]on the lower Bolinger band.
So first rule - stay cool and look properly.

The entry was a market entry going [B]long[/B]. By entering at market price, 5 pips commission was added and the entry was too far into the centre, that being 95.15.
A limit order would have been better giving an entry of, say, 95.10 giving more travel distance into the centre.

Ah well, we have got it now, so lets work with it.

Now we go to the 1 minute chart in case we need the 2nd part of the entry.

Here is the 1 min :


By tymen1 at 2007-08-30

Let us see how this trade developed on the 1 minute chart :


By tymen1 at 2007-08-30

Horror of horrors - the trade is going the wrong way! We want UP (to centre), but its going down.

Now a much better entry would have been at points 1,2 or 3. 1+2 are into the lower BB and 3 is crossing the moving average. Point 3 is also an excellent place to add to a trade because - rule - never add to a losing position!
The MACD tells us that 1+2 are good entry points.
A profit would soon be forthcoming if entry was made at 1,2 or 3.

[B]Continued next post, Tymen1[/B]

24

Hi Tymen,

Fantastic to see your post with the charts. I wish that more people would realize that you can sometimes learn more from errors than from successful trades. Just a couple of questions.

  1. Bollingers are new to me so I was wondering if all the additional lines that you have on the 1 minute charts are part of the Bollinger bands as you don’t have them on the 20 minute.
  2. How are you interpreting the MACD in the 1 minute?
    3)I know that you are looking at time frames up to 1 hour, but I was wondering what specific time frames you are monitoring initially to look for trades?

Looking forward to the continuation…it’s now like waiting for the next episode of a good soap opera on the telly!

Cheers

25

Quick answer to you Winner then I [U]must[/U] go to bed (it is 3am in the morning)

  1. The additional lines are additional Bolinger bands with standard deviations 2.4 and 2.8, the main one being 2.0

  2. The purpose of the MACD is just to see whether the price is rising or falling and to see approxinately where it turns. The turn is great to see when the price is going against you !! It also assists in getting the best possible stage 2 entry.

  3. The time frames are as follows …20 min to 1 hour in 5 min increments plus the 1 and 5 min time frames. Also a daily to get the big picture.

Kind Regards, Tymen Wortel, Perth, Western Australia.

26

[B]There has been a crash of some sort on this website and I was unable to continue. All is now fixed and I shall continue episode 2 in the morning.[/B]:o

Regards, Tymen Wortel, Perth, Western Australia.

27

A great method of trading Tymen, i will study this…:slight_smile:

Regards,

IIN

28

Thanks for the quick reply Tymen.

I am exactly on the other side of the world from you. It is 3pm (MST) here.Being in this time zone is a big problem for those of us here who want to trade the UK session, where most of the Forex action seems to happen. Looking forward to your continued posts.

As an additional point, not just for me, but for the benefit of everyone following your posts, if you have the time, could you post all your indicator settings so that we can monitor our charts exactly the way that you have them set up.

As a Newbie looking at the plethora of Indicators available, I had come to the conclusion that Candlesticks were the most important of all combined with some form of support and resistance, and the others should only be used as secondary confirmation or not at all. Your posts and your success trading along similar lines has given me a great deal of encouragement that I was correct. It’s all a matter of refining Entry and exit now.

Cheers

29

Wow its much clearer with a picture. I think I understand now. I will try to incorporate this in my plan. I use MACD and Bolinger bands also RSI so it it should be pretty easy to add the candle stick to complement it all.

You can contact me on MSN messenger

30

To Winner and Yolybear :

The indicators, MACD + Bolinger, are standard…except that I have changed the MACD trigger setting from 9 to 4 periods.

This is because we are dealing with a rapid moving 1 min chart.

The extra Bolingers, 2.4, 2.8 + more can be added as you wish it your charting platform is capable of doing it.

My next post will be [B]Episode 2[/B].

Kind Regards, Tymen Wortel, Perth, Western Australia.

31

Let us look how the trade proceeded :


By tymen1 at 2007-08-30

The trade reached a profit point at “wait” but is so small as to be of little value. We wait and the trade goes down again but the “downs” are progressively weaker so our optimism improves. The MACD is going up again.

Let us look even further :


By tymen1 at 2007-08-30

The MACD reaches a high point at “exit” indicating that the price is as high as it is going to go so we then exit at that point collecting 13 pips.

With a standard lot, that is a fair profit. Note that the 2nd part of our investment was not used - it was not necessary.

Now let us look at the trade from the 20 minute chart :


By tymen1 at 2007-08-30

Now if I had entered at the bottom of the “candle in question” I would have reaped a profit very rapidly in the next candle. But, as you can see, a profit was made anyway with a longer wait.

The elements that made the trade successful were :

  1. The entry near the Bolinger band

  2. The pattern was very nearly the 1st half of a morning star doji pattern.

These elements put the odds firmly in our favour even when the entry is poor.

One of the 3 principles of this method was properly used. The other 2 were not properly acted on.

The 13 pips is mine. The commission of 5 pips was paid on the entry - 95.15.

In the next trade I will endevour to use the BB and MACD to better effect to gain a better entry. Also the candlestick pattern needs to be recognized properly and confirmed.

I will now conclude.

Regards, Tymen Wortel, Perth, Western Australia.

32

Hi Tymen,

Are there supposed to be images with this post, or does it refer to the images in the previous post?

Regards,

33

Tymen,

I just went back to your older post, and the image with the 20 minute chart has disappeared. i guess there are gremlins at work!

34

To Winner :

Ah ha. I know what has happened. The images on Image Shack are somehow tied to this forum. If you delete the images from Image Shack , they disappear form your post!

Sorry, I have just learnt this now.

I have stored the Images on My Pictures so I will simply reload them, then doctor the posts if necessary.

Please wait, I will fix it all up.

Regards, Tymen Wortel, Perth, Western Australia.

35

Hi tymen1

For any image to be seen on the internet it has to be loaded
onto a webpage, this is what you are doing at image shack,
so if you delete the image from the webpage it’s disappears
everywhere that you have placed that link.

tied to this forum

Also the term is “linked” to this forum, that’s how this smilie
appears.

PS By the way great thread. :slight_smile:

36

To Iinzall, Winner, Yolybear, Daydreamer65 and all others viewing this thread :

[B]My candlesticks Episode 1 and 2 are now fully restored complete with commentary.[/B]

Hope you all enjoy viewing it as much as I enjoyed trading it.

Thank you Daydreamer65 for you input on the links. And again, I like your closing captions.

I think I will be posting more of these trades, but on a new thread I have yet to name.

If anyone has questions about the trade, feel free to ask - I am now finally ready.

Kind Regards, Tymen Wortel, Perth, Western Australia.

37

Hi Tymen,

Your posts just keep on getting better. Keep up the good work.
You said that your primary Bollinger setting is standard. Are you using a 10 day period for your central moving average as recommended by John Bollinger for short term trading? Where did you do most of your learning for Bollingers? Was it a book or a website? I do not understand the purpose of the additional Bollinger bands on the 1 minute chart.

Regards

38

To Winner :

Thanks for your encouragement !! :slight_smile:

The Bolinger band settings are …periods - 20
…Standard deviation - 2.0

These are the common settings.

I have the book…Bolinger on Bolinger Bands by John Bolinger. (not cheap).

The purpose of the additional BB on the 1 min chart is to try to detect extemes.
If we have a price that goes right thro the BB and even the 2.8 BB and, at the same time the MACD is turning around (we look carefully for that and make sure we see the turn)…then we can be pretty sure we have an extreme point.

I hope to be able to illustrate this concept in more candlestick chart postings I am planning.

Hope this helps. :slight_smile: :slight_smile: :slight_smile:

Kind Regards, Tymen Wortel, Perth, Western Australia.

39

I went looking for a candlestick formation. I Looked at the daily chart of EUR/ USD Yesterday (Aug 30) and saw a bullish engulfing candle and a forming morning star. Theses were in the center of the The Bollinger Bands …BUT I went in anyway. It worked. I got my target of 26 pips. WEEEE… gonna try it again on Monday :slight_smile:

40

To Yolybear :

I like your name!

Good on you Yolybear!

But be careful!

It is dangerous trading when the pattern is just anywhere. It is then possible for the trade to go the opposite way to a huge extent with little chance of recovery.
If the trade goes against you then you will need a staged entry.

Once you have a pattern, wait for the next candle and then switch to a 1 min chart with BB and MACD to get the best and safest entry.

41

To Yolybear :

There is also very interesting and further relevant candlestick material on the thread…FREE FOREX TRADING SYSTEMS…“Can anyone help me with a Forex System” by Masterplan.

42

Good Advice tymen1.

I was actually thinking the same thing…:rolleyes: “since it is in the middle of the Bollinger Bands it could go down too”…but I had quickly dismissed that thought being blinded by the candle stick formation.

So thanks for pointing that out. I’ll be more carefull next time. :slight_smile: