As always, you understanding is very profound and crystal clear!!
Yes, you could say that we have a check list.
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
The correct candle body of the extreme candle is the one where the valid CBL is taken.
A more extreme candle with an invalid CBL is not really considered.
In the case of going from A to B, we are indeed in a squeeze.
As per entry rules post #2374, page 238, we do not apply rules 1 + 2.
We simply take the CBL extension off the extreme candle and enter.
In the post indicated, the extreme candle is a red candle that passes tho the mid BB - it is an oversized candle and we cut it in half to get a decent entry.
For an exit, we can use the [U]simple exit method[/U] outlined in this thread much earlier on.
This simply entails waiting for the opposite BB contraction, then exiting at the first candle that disconnects from the BB walk.
[B]
You are in for a good profit if you do this!![/B]
As a school teacher, I understand about ācrash courseā learning.
It is not the best!! :eek:
You will forget most of the main points, especially if you have not done any of the exercises in this thread.
I encourage you at this stage to become familiar with the rules stated in post #2374 on page 238.
Read also how this method was constructed - you will have to go back many pages to where it is introduced.
Also look and study carefully the PDF created by [B]Merchant Prince[/B] in which he summarises the main points.
Unfortunately, unlike my candlestick thread, I do not have someone like [B]FX [/B][B]Carribean [/B]to index all the material in this thread.
Even though the first CBL takes place before the BB contracts, for the sake of this example, lets just assume that it happens after the contractionā¦
We cannot consider hypotheticals because we are dealing with price action and do not know where it will go.
If another candle occurs after the first extreme candle, which has the exact same low as the previous extreme candle, ā¦
Assuming that they are both in the opposite BB contraction area, the most recent extreme candle is the only one to consider - providing that its CBL extension is not worse than the one before it.
Hi Cordite
I think I understand the confusion. If Pa is going long/rising, we are looking for a reversal and therefore a short trade. The CBL is drawn as price action is rising/long. By continuing to draw higher CBL we get the best entry for a short trade
Are you guys finding trades where TP1 is equal to the SL alot, or is TP1 normally more/less than the SL?
Are the majority of trades entered knowing that the risk is greater than reward if only TP1 is hit?
Is TP2 large enough to make up for this, or are BB hugs required with a simple exit stratergy in order to maximise wins?
I only ask as Iāve always been very much in favour of a set R:R per trade, and of knowing what I would be gaining over losing so that I could calculate whether a trade was worth entering. Some of the examples given have had a TP1 sometimes as much as a 1/4 of the size of the SL, and this of course would mean a risk:reward of 1:0.25,
So, I would like to pipe in and offer that maybe, for traders like myself, another rule line is added, where the reward for entering is most likely going to be at the very least equal to the Risk, if not greater? Of course, a high win:loss ratio will mean that we can afford to take these 1:<1 trades, but thatās somethign that only time may tell.
To be honest what you have said there and what I said are in agreement.
However, I do think that the rules as written on this particular point could do with being reversed, as they seem to point towards the opposite of what you and I are saying here.
We both understand the need to move the CBL AWAY from the mid BB, in order to minimise risk and maximise reward. This means that in a short trade, we can raise but not lower the CBL, and in a long we can lower but not raise.
The rules in the post I indicated though suggest the opposite.
We both understand it, just making sure that other who come across them do too and donāt start reducing reward and enlarging risk by accident.
Cheers as always for the help, and what a great collective of people this thread has brought together.
Hey Cordite, from the testing I have been doing over the past 24 hours, I have been very surprised, and consequently very happy!
By not entering any trades where price is too close to the mid-BB, the GBPUSD pair chart has been very useful in producing a very high number of wins.
In terms of TP1 reward/risk though, in my tests, they have very frequently been less than 1.
Having said this, by having such a large number of wins against losses, it is easy to see the merits of this system if a larger number of contracts are traded.
Seeing as though Iām still new to this strategy, I will continue my testing and real-time demo trading before I can draw definite conclusions about my R/R.
In my looking back through the charts I notice that quite often the extreme candle is a dogi or a very small bodied candle. Since the entry signal candle body must have a smaller body, how do we handle this. Pretty tough to find a smaller body that will qualify to let us enter. I see many good trades that never allowed an entry according to this rule. Any solutions?
Thanks Tymen for your detailed explanations as usual As I have a full time job, your break is good timing for me to study live examples of the entry rules and also to recognise a BB squeeze from a BB sausage that has just narrowed its bands for a few bars before continuing its sausage trend. I never liked homework much in school but I canāt wait to do this kind!!
Hey PTB, a potential solution to your problem could be to look at a number of different TFs at once.
I am currently monitoring 20, 25, 30, 35, 40, 45, 50, 55 and 60M charts of 8 currency pairs (any guesses as to why? - hint: Ultimate Candlestick Trading :D).
An extreme candle which appears as a doji on a 20M chart may have a completely different body on, say, a 30M chart.
This is a very brave and quality decision you have made RenaLa!!
This method is for experienced traders only, [B]Didilut [/B]also appears to have quit.
I congratulate you on your decision and trust that you will benefit greatly by going to other threads on the forum where others with different types of trading methods can contribute to your growing knowledge.
