[B]Advanced level - Chart 11[/B]
By tymen4 at 2008-11-08
Another quick look at the [U]main chart.[/U]
Yes, the price action is walking the upper BB.
The mid Bollinger band is turning up.
Everything is going according to plan.
[B]Advanced level - Chart 12[/B]
By tymen4 at 2008-11-08
[B]
I have increased the magnification on this chart for increased clarity.[/B]
You can see the previous buys and sells (B1, S1, B2, S2).
A new entry, B3, is now made as the price action falls right towards the mid BB and the lower 0.65 line of the starc bands.
This long entry was made at the bottom of the red candle, but again, the spread of 4 pips puts the entry line about halfway up the red candle.
[B]We will wait for the price to rise again.[/B] 
[B]Advanced level 1 - Chart 13[/B]
By tymen4 at 2008-11-08
Again, the price action goes up as expected.
How can we expect this?
Because the mid BB is going up and the price action is walking the upper BB.
On the 5 minute chart, the price action will oscillate between the lower and higher points of the starc bands.
[B]So it a case of buy low, sell high.[/B] 
So in this chart, the price action hit the upper 0.65 starc band and I hit the sell button!!
Exit minus Entry = 91-85 = 6 pips.
For[U] 2 amounts,[/U] that is 12 pips.
[B]Advanced level 1 - Chart 14 - FINAL[/B]
By tymen4 at 2008-11-08
One last look at the main chart.
Oh what a lovely sight.
The candles are all walking the upper Bollinger beautifully.
The mid Bollinger band is swinging up.
Everything is set up for excellent further trades.
However, look at the time - 4.41 am :eek: :eek:
I really do need to go to the blanket show!!
So lets finish by removing the PCI from the chart and add up our pips.
[B]Total = 42 pips[/B]
A [B]Basic level [/B]trade would have yielded 32 pips if exactly the same price range was used, that is, 2 amounts from 69 thro to 91.
[U]This was a very slow trade.
The stop loss was never under any threat.[/U]
[B]END OF TRADE[/B].
[B]STATISTICS[/B]
[U]The Strategy[/U]
[B]Advanced level[/B]
Full Starc band trade.
1st amount - 5 mini lots.
2nd amount - 5 mini lots.
[U]The trade[/U]
USD/CHF
25 minute candlestick main chart with Bollinger bands added.
5 minute Starc band chart with Bollinger bands added.
3 Green Soldiers pattern.
Program used - GFT Dealbook.
Magnification - 30/40/72
long trade.
[U]Times[/U]
London open.
New York open.
Traded atâŚ
Perth ďż˝ 2.30 am.
GMT ďż˝ 6.30 pm.
New York ďż˝ 2.30 pm.
Los Angeles ďż˝ 11.30 am.
Sydney ďż˝ 4.30 am.
[U]The Figures[/U]
B1 = 1.772
S2 = 1.1784
2 amounts = 24 pips.
B2 = 1.1787
S2 = 1.1790
2 amounts = 6 pips.
B3 = 1.1785
S3 = 1.1791
2 amounts = 12 pips.
Total = 42 pips.
Compare with Basic level : 32 pips.
PCI - 1.1724 changed to 1.1759
Risk/Reward = Irrelevant - trade was never under any threat.
Do the figures include spread costs?
[B]I will now explain the correct use of the Bollinger bands.[/B]
We only trade the candlestick patterns when they are placed on the upper or lower Bollinger bands.
These bands mark an extreme point, and prices at these extremes are more likely to return to the centre, that is the mid Bollinger band.
By choosing a shorting candlestick pattern on the upper Bollinger we combine 2 powerful signals, that of the pattern and the extreme of the price.
The same is true a long candlestick pattern on the lower Bollinger.
We know that when prices are at the extreme of the Bollinger bands, the price action is much more likely [U]to go only one way[/U], that is, into the centre.
We also know that when a candlestick pattern appears, it indicates that price action is about to go in [U]one particular direction[/U].
By now observing the appropriate candlestick patterns on the Bollinger bands, we greatly amplify the probability of the price action going in the direction dictated by the patterns, because [U]we are combining 2 âone wayâ probabilities[/U].
Examine the following diagram which shows the Bollinger bands (blue lines) expanding >>>
By tymen4 at 2008-11-05
There are 2 candlestick patterns on the drawing ďż˝ red is a shorting pattern and green is a pattern for going long.
The green and red lines show the relevant price action.
Note how the patterns break the trend of the price action only slightly.
A few candles later and the price action resumes it original direction.
[B]This diagram then, shows incorrect use of the Bollinger bands in determining a trade. [/B]
Here is now what happens when 2 short or long patterns appear in sequence >>>
By tymen4 at 2008-11-08
After the second pattern, the price action goes the correct way the pattern dictates.
[B]Therefore, if you see a second pattern on an expanding Bollinger band, you can expect a successful trade after this pattern.[/B]
[B]But under no circumstances can you expect a successful trade on an expanding Bollinger band with the appearance of only one pattern.[/B]
No.
The figures are [U]pure gain.[/U]
The 4 pip spread in each case was already removed!!
[B]We now look at the correct use of the bands when they are expanding :[/B]
[U]Examine the following diagram [/U] >>>
By tymen4 at 2008-11-08
When the BB are expanding we choose a long pattern on the upper BB and a short pattern on the lower BB.
In this way we are trading with the trend and hence can expect success.
[B]We now look at the bands when they are contracting :[/B]
By tymen4 at 2008-11-08
When the bands are contracting, the price action is being returned back to the centre, that is, the mid Bollinger band.
At this point then, a shorting pattern is used on the upper and long pattern on the lower BB respectively.
This ensures that you are trading with the trend.
Examples of shorting patterns are dark cloud cover, short engulfing, evening star.
Examples of long patterns are piercing pattern, long engulfing and morning doji star.
[U]
In summary :[/U]
For expanding Bollinger bands, use patterns that direct the price away form the centre.
For contracting Bollinger bands, use patterns that direct the price towards the centre.
Also��
For level Bollinger bands, check which way the bands are likely to go but generally use patterns that direct the price towards the centre.
Do not trade patterns when there is little width to the Bollinger bands and there is little sign of them expanding.
âDo not trade patterns when there is little width to the Bollinger bands.â
Usually, when Bollinger Bands are narrow over a period of time, price is being squeezed and this is a prelude to an explosion. Many breakout systems are based on this. Bollinger / Keltner channel combo systems exploit this. This is one way I gobble pips.
Welcome to this thread Pipgobbler!!
Even though I am in the closing stages.
I am glad you understand the expansion principle already and use it to your advantage.
Thanks for posting.
I have just corrected my statement to addâŚand there is little sign of them expanding.
I have posted this material on my thread to supplement my trading method because I am surprised to find that there are many traders who [U]do not [/U]understand this principle. :eek:
When bands contract I wait. When price makes it move, I enter the trade and manage the money. Thatâs how I gobble pips.
Thanks for posting again Pipgobbler.
At least someone is reading my posts!!
Please do remember that my posts on the use of BB is meant to be a general guide to be used in conjunction with candlestick trading.
This post is given in context with the material in the whole thread.
It is not meant to be Bollinger band trading on its own.
My last post now - I must go to bed!!
Oh, excellent scalping then my friend! Youâd be making a killing on an ECN broker I think.
ANd here i am again a few weeks later , haveing read the WHOLE thread ⌠I had to constantly go back and re read things over and then look again the next day to fully understand and let it all really sink in .
I feel confidant in recognising QUALITY patterns now , and i have a better over all understanding of things in general .
Im still trying to figue out the dealbook fully with the demo before attempting live trades again . I have been spending all my time reading this thread and absorbing much needed knowledge , and i look back on my first few posts in embarassment :o what a fool âŚ:rolleyes:
THank you Tymen for all your hard work , and all others who have contributed along the way , I hope knowing this helps you to gain some pleasure of knowing the impact you have had on people like me who would have had a really hard time without a very well thought out and presented method of trading presented like this .
I think being able to watch it all unfold from the beginning to end has been a real help for me .
I look forward to reading the other related live threads on this method too .
Thanks Tymen for the explanation on the BB - I think I have come to the understanding youâve outlined but seeing it clearly and in picture form was extremely helpful in soldifying the info.
On to the questions and forgive me if theyâre a little obtuse!
-
A couple of weekends ago I noticed a morning star at close on Friday, is it safe to assume this pattern becomes null and void since too much can happen over the weekend and sentiments have likely changed?
-
Canât remember what day - yesterday or day before I noticed a morning star on the 30, 35 and 45 min charts. I missed entry on the 30 and 35 min charts. The last candle of the star was still completing on the 45 min chart. Would it still be safe to trade on the 45 min chart even though the price was already moving (correctly) on the 30 and 35 min charts? ie - I wasnât losing âsteamâ because of coming in late? Could I still use the 7 candlestick rule after the 45 minute pattern? The other issue I was concerned about that kept me out was that the pattern on the 30 and 35 min charts were too close to the middle BB (or maybe touching, canât remember now), the 45 min wasnât on the lower BB but was much closer than the other 2, so it seemed rather iffy. Does seeing the same pattern on 3 different charts add any strength to the pattern?
-
In these last few examples, youâve got the BB on the 5 min chart as well, although I thought with the UM you had decided they werenât necessary any longer. So, are you just keeping an eye on overall price action by having them on the 5 min chart?
-
Regarding resetting the PCI to break even using the drag method in Dealbook. Iâve found that it doesnât let me drag the s/l right on top of the entry, it bumps it down a few points. Am I doing something wrong or is it an issue with demo mode?
And, regarding clearing the chart after youâre done - just learned the hard way why thatâs so important. OwwwwwwwwwCH!!!
Yes, you are correct, it [B]does [/B]look a bit like scalping in this trade.
That was caused by the fact that the price was moving very slowly.
Lets see how the next trade pans out. 
You are welcome!!
Your questions are not obtuse.
Just a lot of them.
You are making work for me!!
- A couple of weekends ago I noticed a morning star at close on Friday, is it safe to assume this pattern becomes null and void since too much can happen over the weekend and sentiments have likely changed?
The pattern is [U]never [/U]null and void.
The last Advanced level trade I did was on Friday!!
Would it still be safe to trade on the 45 min chart even though the price was already moving (correctly) on the 30 and 35 min charts?
Of course!!
A pattern is a pattern.
Could I still use the 7 candlestick rule after the 45 minute pattern?
Yes.
But remember that 7 candles is not a hard and fast rule.
The exit should be such as to get as many pips as you dare to go before a reversal sets in.
Does seeing the same pattern on 3 different charts add any strength to the pattern?
Personally, I find that many charts separated by 5 minutes each gives me a better feel for the trade.
But that is just me.
Others will experience differently.
So, are you just keeping an eye on overall price action by having them on the 5 min chart?
Correct.
The starc bands do all the work.
However (as an example) if price action is in the middle starc band and at the same time going above the upper BB, it is a time for caution.
The starc bands travel within the channel of the BB and hence you can keep a tab on what is going on.
[B]For greater insight, keep looking at my further Advanced level trades to be posted.[/B]
- Regarding resetting the PCI to break even using the drag method in Dealbook. Iâve found that it doesnât let me drag the s/l right on top of the entry, it bumps it down a few points. Am I doing something wrong or is it an issue with demo mode?
Nothing wrong with you, the thing reverts back every time the price jumps one pip.
Therefore I have abandoned the use of this method.
Set the PCI manually.
It is slower but it works first time.
[B]Remember to cancel the original PCI if you are changing it!![/B]
And, regarding clearing the chart after youâre done - just learned the hard way why thatâs so important. OwwwwwwwwwCH
ahhhh - I did post the warnings!!
Your questions are not obtuse.
Just a lot of them.
You are making work for me
Sorry, you told us to ask before the thread is closed, so asking I am! I had hoped the questions would have simple answers and not cause too much work! Plus, Iâve just be re-reading and re-reading to make sure that the info is clear and I know how to ask the questions I have, hence the inundation.
The pattern is never null and void.
The last Advanced level trade I did was on Friday!!
So, are you saying that it would be safe to start trading first thing Monday based on a star at closing on Friday?!??
For greater insight, keep looking at my further Advanced level trades to be posted.
Canât wait!
ahhhh - I did post the warnings!!
You certainly did! I think that is one reason Iâve been so impressed with this thread - youâve left nothing out in your instructing!
I seem to be the kind that has to make every mistake once and then Iâm fine. Good thing for demo.
Oh, and one more Q re Dealbook, what programming language does it use if you wanted to do your own indicators? Iâm obviously NOT the programer or I wouldnât be asking this qestion, but have access to one.
This is getting very exciting! The light bulb is beginning to glow :).
But you have thrown me a bit with the new candlestick patterns. I thought the ones you trade are listed below?
I know there are a lot of candlestick pattern and earlier in the thread, you said you focused on just a few. Would you list them in full?
Thanks, F X
Examples of shorting patterns are dark cloud cover, short engulfing, evening star.
Examples of long patterns are piercing pattern, long engulfing and morning doji star.