The finest in trend trading

[tymen1]

[B]THE ENTRY RULES[/B]

1. [B]The CBL consists of one candle only.[/B]
   The entry line is drawn off the high/low.

2. Our [U]CBL search [/U]starts when we find a candle that passes thro the BB - an “extreme” candle.
   [B]After that [U]any [/U]extreme candle is good.[/B]
   It [U]does not[/U] necessarily have to pass thro the BB.

3. [B]Our [U]“entry candle” search[/U] starts when the opposite BB contracts.[/B]
   Before this point, no candle can qualify as an entry.
   This is done to protect against possible retracements.

4. [B]As more extreme candles appear, we set a new CBL.[/B]
   But …
   In a long trade - we NEVER raise our CBL.
   In a short trade - we NEVER lower our CBL.

5. [B]An entry is finally made when…[/B]
   … a candle close passes thro the CBL.
   and
   …that same candle has a smaller body than the extreme candle.

[B]FINAL NOTE

These rules apply for BB bubble and BB sausages.
When there is a level/near level case, or a squeeze area we [U]only [/U]need the CBL.
We have [U]no need [/U]of the 2 special rules - close and smaller candle requirements.

An oversize extreme candle is one which passes thro the mid BB.
If such a candle appears in the level/squeeze case, it is cut in half to effect a practical CBL entry.[/B]

[tymen1]

Haha good to know you’re keeping an eye on us, Tymen.
I was thinking things seemed to be getting pretty messy.

Thank you for the replies - I did not think anyone was here on the forum at this time. :o

I will now do my best to answer your questions.
Please let me know if I have left questions unanswered.

[tymen1]

candle 6 is not the extreme since it makes you get the CBL to a worse entry.
candle 5 remains the extreme. all according to Tymen’s post on that graph.

Your right candle 6 would lower the cbl and Tymen said not to do that.

Correct!!

Sometimes you will get a [U]more [/U]extreme candle than before, but that same candle will actually give you a [U]worse [/U]CBL entry.

We [U]ignore [/U]such extreme candles.
We look for the best CBL that give us an entry that obeys the rules.

As I said…

In a long - NEVER lower your CBL.
In a short - NVER raise your CBL.

[tymen1]

…
I don’t believe it matters which direction the CBL is hit from. Perhaps Tymen can enlighten us.

This is correct.
It does not matter how the entry price is hit.

[B]The important thing is that it is hit!![/B]

[turk]

Hi Tymen1 a huge thank you for such an educational thread and to fellow travellers, a big thank you for all the assistance being offered.

Hopefully an easy question first, earlier in the thread there was a link from Tymen1 to GFT that allowed a demo account to be opened indefinately unfortunately I’m not finding this link, could any one point me in the right direction?

Thanking all in advance.

Cheers

Turk

PS. Tymen1 weclome to Melbourne when you arrive:)

[tymen1]

Hi guys, where am I wrong here ?

[B]There is nothing wrong with this entry!!

It has obeyed all the rules!!
(close, body, BB contraction).[/B]

[gregart]

thanks tymen, that mean i am not completly stupid , but this is a lose no ?

[B]There is nothing wrong with this entry!!

It has obeyed all the rules!!
(close, body, BB contraction).[/B]

[tymen1]

thanks tymen, that mean i am not completly stupid , but this is a lose no ?

Depending on how many pips in the spread, it would be either [U]break even[/U], looking to TP2 for a profit or else slight loss at TP1.

[tymen1]

Also, any thoughts using this system on where to have entered prior to the bubble?

Prior to the bubble - entry on the lower BB to the very left of the chart.

Can anyone reply to how they would handle the exit on this beautiful bubble that occurred today USD/CAD 30M? I have labled the candles for easy reference.

Your chart is very small but I think I see candle 1 as the most extreme candle.

There are no exits meeting rules 1 + 2 for this candle.

[U]But really…….[/U]

Given that all you are doing is an exit (and you have made an outstanding profit from the entry at the lower level point) – then why not just use the [U]simple exit method[/U].

This method, if you remember, simply requires you to exit at the first candle that leaves contact with the Bollinger bands.
In your case that is candle 4 – a wonderful exit point!!

[B]We need to think “outside the box” and not get hung up on the CBL system.[/B]

[tymen1]

jcgibson is right, candle 6 is the last extreme candle and no other candle closes below the low of candle 6 until candle 11.

Candle 11, however, doesn’t look like it’s smaller than candle 6. If it is, then entry is at open of candle 12 (the long blue one at the end).

Otherwise I dont see any valid entry at all :eek:

[B]Last comment on this one…[/B]

[B]I have done this correctly!![/B]

The CBL extension of candle 6 is [U]lower [/U]than the CBL extension of candle 5.
This is a NO NO.

We NEVER lower the CBL. (stated in the rules).

So the candle 5 CBL extension is the valid one.
The doji candle following then obeys rules 1+2.
The entry is then as shown.

[tymen1]

is that mean that we must only look at the contraction of the BB and not the output of an candle ?

or have first an output of BB candle ?

thanks tymen

Greg

I hope that my stating of the rules will help you now sort out the confusion.

[tymen1]

…
Why is candle 5 a potential CBL candidate when it has not passed through the upper BB?
…

Also one last thing. Would it be fair to say that you should look for an opposite BB contraction before even bothering to look for potential CBL entries?

These 2 questions of yours are now answered fully in the rules I have posted in post #2374 on page 238.

[mkbrooks]

I hope that my stating of the rules will help you now sort out the confusion.

Thanks very much, Tymen. Your summary of the rules, and the notes on the charts just now have made everything much clearer, at least for me!

Now I just need lots of practice and revision!

[tymen1]

…
I have to point out an obvious problem with this trade. I’m sure you are aware of it. The problem being…it doesn’t make any money!

…
Does there not become a point of no return where you entry is so near to your TP1 that the entry is null and void as a consequence?

You are quite correct in both points here!! :o

We do have to be vigilant!!

If you think or can see the mid BB creeping up on your trade entry, then it is best to give that trade a miss!!

[B]This trading method is really designed for high lots where a small pip profit has the effect of producing a high monetary profit. [/B]

[tymen1]

Your summary of the rules, and the notes on the charts just now have made everything much clearer, …

Thank you for the feedback, [B]mkbrooks[/B].

[Mystic]

You are quite correct in both points here!! :o

We do have to be vigilant!!

If you think or can see the mid BB creeping up on your trade entry, then it is best to give that trade a miss!!

[B]This trading method is really designed for high lots where a small pip profit has the effect of producing a high monetary profit. [/B]

Thanks Tymen, looking forward to the next installment

[Merchantprince]

OK, here I go again!

I wanted to wait for Tymen to assist with what Graviton and hachiko were trying to do: lay out the rules in a simple, step-by-step fashion. Now it looks like we have that clarification, so I’ve been working on formatting everything that’s been covered so far into some handy PDF references.

As such I have finished two more PDFs to add to our growing collection (if you are new to the thread, be sure to grab an earlier document detailing the overall theory of Tymen’s Bollinger Band DNA trading).

I have made some grammar and formatting fixes to help improve what’s been paid out so far but, as always, no content or images have been changed from Tymen’s original lessons.

The first PDF is a clean, two-page document with just the Four Price Action charts you can print out for easy reference. The second PDF represents the lesson content of the last several installments, along with a detailed synopsis of the step-by-step method for making these entries.

Tymen, let me know if anything is not to your standards and, for everyone else following along and doing our best to learn, enjoy!

EDIT: The CBL Rules PDF has been corrected for Tymen’s typo on not raising/lowering the CBL.

Bollinger Band DNA Four Price Action Types.pdf (141 KB)

The Count Back Line Rules.pdf (91.9 KB)

[tymen1]

ok, I took first chart under my hand. Its 30 min eur/gbp
Candle #1 doesn’t qualify its before opposite BB contraction.
Candle # 9 is go no where

Candle # 2 is qualified to be extreme candle. Candle #11 has close below candle #2 and its body smaller. Candle # 11 is qualified for entry.

Candle # 14 is qualified for Exit of trade #1 as the body is smaller and close is above extreme candle.

is everything correct?

[B]The logic of your analysis is quite wrong here and I will explain why in detail.[/B]

[B]Firstly, and most importantly, the candles you refer to are not in a BB bubble or a BB sausage.
Instead, it is a BB squeeze area as per my rules in post #2374, page 238.[/B]

Candle #1 doesn’t qualify its before opposite BB contraction.

This rule does not apply here - no BB bubble or a BB sausage.

Candle # 9 is go no where

From candle 9 you could do a quick OO trade to the lower BB.

Candle # 2 is qualified to be extreme candle.

It is indeed an extreme candle and from here you would do a trade into the mid BB for a TP1 profit at candle 5. (The price action retraces to candle 9 – no TP2)

Candle #11 has close below candle #2 and its body smaller. Candle # 11 is qualified for entry.

Irrelevant in this case because of the above squeeze rules.

Candle # 14 is qualified for Exit of trade #1 as the body is smaller and close is above extreme candle.

This is irrelevant also.

[B]The correct way to trade this whole senario is this………… [/B]

[B]First, we discern that we are trading in a squeeze area and not in a BB bubble or sausage.
Therefore, level BB rules apply.
See rules, post #2374 page 238.[/B]

We note extreme candle 2, enter at 3, exit at 5 for TP1.
No TP2 – break even instead.

Candle 9 is again extreme, enter candle 10, exit 1st contract at candle 10 for TP1, go on to the lower BB and exit 2nd contract for TP2.

END OF TRADE.

To enter at the lower BB and exit at candle 12 makes no sense.

[B]In this system the very first principle of operation is that we seek to enter at one of the outer BB and trade thro to the other outer BB.[/B]

That’s how this method works.

In your case, you are entering at the lower BB and exiting candle 12 at the lower BB, [U]thus contradicting the operation of the method.[/U]

[B]In summary, I again warn you RenaLa, that this method is not for beginners.
If you lose your money in live trading with this method, then don’t blame me – I have warned you beforehand!![/B] :eek: :eek:

[kockneerebel]

Great work Tymen, thank you. Just a couple of clarification questions if I may.

1. Do the rules operate as a check list ? ie. once the condition is met it remains valid

a) Candle passes through BB - [B]Check[/B]

b) CBL drawn from High or Low of that candle or any subsequent extreme candle. High or Low CBL remains valid until new high or low made—[B]Check[/B]

c) Opposite BB contracts - [B]Check[/B]

d) Candle closes through and / or remains through CBL - [B]Check[/B]

e) if level BB enter trade on open of next candle -[B]Check[/B]

f) if Bubble or sausage and candle body smaller than body of extreme candle -[B]Check[/B] enter Trade on open of next candle

2. Is the extreme candle body classified as the candle where the CBL is taken or an following extreme candle with a larger/smaller body that did not produce a valid CBL

[tymen1]

…

Hopefully an easy question first, earlier in the thread there was a link from Tymen1 to GFT that allowed a demo account to be opened indefinately unfortunately I’m not finding this link, could any one point me in the right direction?

Yes!!

I cannot give you the link directly (not allowed on this forum), so if you will google Kinetic FX Trading of Sydney, then get hold of Jay Pace and telephone him and tell him that Tymen sent you.
You will get excellent service!!

SYDNEY OFFICE
Level 9
Permanent Trustee House
23-25 O’Connell Street
Sydney NSW 2000 Australia
Tel: +61 2 9295 9800