As I have been studying HA candles quite a bit recently, I am looking forward to your lessons in this area, Tymen! 
Looks very interesting Tymen, looking forward to the rest of the lesson.
Gerard:)
Hi all,
First off, thanks Tymen1 for this excellent thread. I’m currently at page 57 and won’t be reading this post for atleast a week (time permitting). Your style and method is brilliant. THANK YOU. Keep it up!
At page 57, you are just getting the building blocks. Everything will change.
Let us now start out with our first trade - here it is >>>
Remember this one?
Here is the HA version >>>
Explanation.
We have not included the parabolic sar, since on the HA chart it would be false.
If you want the PSAR, then put it on a standard candle chart underneath.
In any case, the mid BB serves as our ultimate stoploss.
Very Important!!
Up to TP1, the standard candle chart applies.
The HA only applies when we have a BB walk.
After TP1 we are already in the trade looking for TP2 and suspecting a BB walk.
We exit on the change of colour at X1.
We watch and wait.
We see the trend starting again and candle A, which crosses the upper BB, is our cue to re-enter.
We re-enter at E2.
We exit on the colour change of X2.
Our next cue it candle candle B which touches the upper BB and we enter at E3.
We exit on the colour change of X3.
Then candle C, and E4/X4 follow the same proceedure.
After X4, the candles are red and hit the mid BB = end of trade.
In the Heikin Ashi exit method, several re-entries and exits occur, making it different from other exit methods.
Let us now join the standard chart and HA chart together to see our entries and exits in real time >>>
If you had followed the method above exactly you would have made a loss on the last 3 entries/exits. :eek:
However…
Assuming we have a strong trend indicated by the mid BB, then we could enter every time at the first green HA candle instead of the one that passes thro the upper BB.
If you had done that, then you would have made a good profit on all of the trades, except the very last one, in which you would have sustained a loss. :eek: :eek:
[B]Of the 3 exit methods, I definitely prefer the Parabolic Sar/mid BB method[/B].
[U]The Di Napoli MACD method [/U]does not always give a great exit, although many times it does.
This can be a great exit method as long as it gives [U]one [/U]signal crossover.
However, it suffers from the fact that it can give [U]2 signal crossovers[/U], and certain rules have to be applied to see if the first early crossover can be ignored.
Most of the time, the first crossover can indeed be ignored but how can you tell if there are 1 or 2 crossovers? 
Ths can only be seen in hindsight.
So if you ignore a crossover, thinking that a 2nd crossover is to come, then what do you do[U] if a 2nd crossover does not come[/U]? :eek:
The answer is that you are faced with exiting as the price action hits the mid BB - and that may turn out to be a very poor exit indeed.
In summary then, with the MACD, you have a certain lack of control over where your exit is destined to be.
[U]The Heikin Ashi exit method[/U] looks very attractive with all those green candles lined up so nicely side by side.
It gives a real feeling of strength to your trade.
But that is where the illusion ends!! :eek:
The candles [U]do not indicate real price[/U], and, therefore, what looks to be an up candle in HA, is really a down candle in real price!! :eek:
[B]
Beware of false encouragements!![/B]
Furthermore, even if entry is made on the very first HA candle in your favour, the trade is nevertheless [U]broken up into pieces[/U] by the HA method. :eek:
You enter, exit and re-enter again.
Extra pip spreads are involved here.
And finally, even with the most astute entries, there is still [U]potential for a loss!![/U]
In the end, the fact that losses can still occur, nails this method as [U]unsatisfactory[/U]. 
So, in spite of [U]the wonderful and beautiful candle arrays enticing you[/U] to use the HA method, all is not what it seems, and the potential for loss, the breakup of the trade and the false price action make this method a last choice for quality exits.
[B]The MACD exit method requires you to know the future, to know in advance whether you are going to have one or two exits.
You cannot know this.
If you assume 2 exits when there is only one, then very poor exits can result.
Therefore, this is not a preferred exit method.
The Heikin Ashi exit method breaks up the trade into several entries and exits, each with an extra spread of its own.
There is a distinct possibility of loss on one or more of these trades.
Therefore, this is not a preferred exit method.
The Parabolic Sar/mid Bollinger Band exit method incorporates the parabolic sar as a stoploss guide knowing that the price action will never cross this line.
Even when inverted, the close must cross the line - something that happens only when the price action reaches its best profit level.
The PSAR acts as a psychological encourager, something unique in a trailing stoploss.
The mid Bollinger Band acts as the secure ultimate stoploss and is rarely hit because the BB walk is a powerful trend.
Therefore, the Parabolic Sar/mid Bollinger Band exit method is the preferred quality exit method.[/B]
Needless to say, from hereon I am going to concentrate on the exit method of my choice - the PSAR/mid BB method.
You are free, of course to use any exit method you like.
You can even use Horoscopes to give you exits if you wish!! 
I will pick several trades in sequence to nullify accusations that I may be cherry picking trades.
However, that is for tomorrow.
After so many late nights, I want to go to bed early for once.
Also, the great [B]Rhodytrader, (John Forman), Honorary FX Member[/B], has sent me an important private message and I need time to give a full and proper answer.
Many of you (especially the new traders) do not know who [B]Rhodytrader [/B]is.
He is a Master Trader, a world authority in the area of trading!!
He was the only mentor on Babypips when it first started, indeed much of its success at the time depended on him. 
As thousands of newbies came onto this forum, with many of them growing to accomplished traders, [B]Rhodytrader (John Forman), Honorary FX Member[/B], has faded into the background, making only occasional posts on this forum.
However, as a world authority, he remains our greatest mentor and easily our most knowledgeable trader on Babypips.
When no one knows the answer to a forex matter, everyone turns to him and he has the answer.
I have never known him to make a mistake on this forum. 
He holds my highest respect.
I think you should all know something about our great and Master Mentor, and for that reason, I give you this hyperlink…
Tymen thanks for this explaination, but I have one question;Why do you entre on candle A? Would it not be better to wait till after the next 2 candles? okay 2 questions:rolleyes:look forward to your explaination
Gerard
Sorry Tymen I am refering to the bottom chart not the top one.
hi tymen and all, its great lesson to study
can anyone please explain what it is means
"the stoploss is put on pause"
there is no any sl at all or there is SL but it equals to last value of the parabolic sar before it inverses?
If parabolic sar is below a squeeze can I enter right at the bottom Band or I can still have to wait for cbl ?
I didnt understand why we didnt exit at the point D - on first inverse but we exit at point E on the second inverse (post #3889)
thanks
HI RenaLa
You already found the answer.
You just stop moving the SL with the PSAR until its not inversed anymore.
Remember that your PSAR-StopLoss should only be executed when you have a CLOSE below/above it.
Thank you Tymen for explaining the way that the Heiken Ashi candles are not as great for exiting from a BB walk, as I thought they may have been. A case of “all that glitters is not gold!”.
I am happy to accept your preferred method - parabolicSAR / midBB method - as being the best.
Ken.
Finally caught up with this thread again. I also been trying to find ways to cut my loses and hold onto BB sausages longer. Grav’s advice to cut loosing trades quickly before SL such as the last swing high/low does help with smaller loses.
Also I been looking into the ADX to see if that could help with identifying the end of a sausage/bubble. However it looks like no matter how hard I investigate, you always have the better answer! And you always seem to discover it so quickly!
OK, I am not sure that I understand your confusion but I will try to answer your question.
The green candles are UP candles, the red ones DOWN candles.
We are trading up, so we enter on a green candle.
It would have been better to enter at the end of the green candle in front of candle A to get the maximum out of the upward trend.
Does this help?
NForex has given you a quality answer to this!!
If parabolic sar is below a squeeze can I enter right at the bottom Band or I can still have to wait for cbl ?
You [U]always [/U]enter on a CBL even if the PSAR is doing loop-the-loops!! 
I didnt understand why we didnt exit at the point D - on first inverse but we exit at point E on the second inverse (post #3889)
At point D where the 1st inverse was, the CLOSEs of the candles after the inverse did not pass thro the parabolic sar.
[U]Point E is a special case[/U] - I refer to my statement in BLUE (a mandatory trading statement) in post #3887 on page 389 which says…
[B]If, after an inversion and restoration of the parabolic sar, the price action hits the outer BB, exit at that point.[/B]
If you examine the chart you are asking about, then you will see that point E is such a case.
Hope this helps.