The price action has sky rocketted upwards - green candle.
Time to enter again!!
The short entry was not the best since the starc bands were going down very steeply and this gave cause to believe that the best entry would be about where I entered.
Of course, if you had entered [U]only 1 amount at this point[/U], you could then have entered the [U]2nd amount[/U] at the top of the candle and hence improved your entry with the compute [U]averaging [/U]the 2 entries.
But as I said, my hands are full just doing the screen printing.
Advanced level
Full Starc band trade.
1st amount - 5 mini lots.
2nd amount - 5 mini lots.
[U]The trade[/U]
USD/JPY
25 minute candlestick main chart with Bollinger bands added.
5 minute Starc band chart with Bollinger bands added.
Dark Cloud Cover pattern.
Program used - GFT Dealbook.
Magnification - 72
Short trade.
[U]Times[/U]
London open.
New York begins to open.
Traded atā¦
Perth ļæ½ 8.15 pm.
GMT ļæ½ 0.15 pm.
New York ļæ½ 8.15 am
Los Angeles ļæ½ 5.15 am.
Sydney ļæ½ 10.15 am.
[U]The Figures[/U]
S1 = 99.43
B1 = 99.27
2 amounts = 32 pips.
S2 = 99.25
B2 = 99.18
2 amounts = 14 pips.
S3 = 99.23
B3 = 99.17
2 amounts = 12 pips.
Total = 58 pips.
Compare with Basic level : 27 pips.
PCI - 99.53
Risk/Reward = Irrelevant - trade was never under any threat.
I downloaded and read this candlestick strat. (Iām learning candles) Parts of the direction seem to need a rewrite as they donāt clearly mean what is meant I think. Here is an example:
ā1) Firstly, we get one small profit from the 1st amount.
2) The stop loss or trade closure is now moved to the trade entry point. (Break Even).
The 2nd amount has a much larger profit target, but at worst, it would retrace to the trade
entry point, giving a profit/loss of zero for this amount.ā
Is this supposed to mean that the stoploss for the second trade (amount) is now moved up to where the first one closed? I kind of get it, but the wording needs to be worked out better by whoever wrote it. Itās not clear where the second amount/trade is supposed to be placed and then stopped out?
Thank you for answering the candle pattern question from yesterday.
On this trade you said you are violating your rules. I thought you were suppose to exit when the candle reaches the strac band levels? How would your known the next candle would be even lower?
[U]The rules specifically state that when the starc bands are going down, your exit candle will be the second one touching or passing thro the lower Bollinger band.[/U]
The way I know that the next candle is [U]very likely[/U] to be lower is that when the starc bands go down steeply, the price action will walk the lower BB.
We can expect several candles to walk the bands.
This is a property of the Bollinger bands and also the Starc bands.
I have examined this carefully and concluded that after 2 candles walking the BB, an exit is a good idea.
This is a [U]general [/U]rule.
Now sometimes you get up to 3/4 candles walking the bands.
And sometimes only one.
In that case the next candle may not be as good an exit.
But in any case, any one of the above cases is a much better exit than what I did!! :o :o :o
Questions:
As we move in the direction of the BB for the trade, in this case down, do you ever move the stop loss down to prevent erasing gains from previous trades?
I was reviewing the enter rules for expanding and contracting BBās, for expanding in particular, do we only enter long with the 3 Soliders and and short with the 3 Rosellas? Or can one go long, for example with a Bullish morning star as it rides the upper BB or a Bearish Engulfing as it rides the the lower BB?
No, the PCI stop loss should be set in accordance with the rules (3 pips away from the extreme candle) and then should not be moved from there.
When you have had a lot of experience you can, in the Advanced level shift the stop loss if it appears at an irrelevant point.
But caution, you have to know what you are doing.
Much practise first.
I was reviewing the enter rules for expanding and contracting BBās, for expanding in particular, do we only enter long with the 3 Soliders and and short with the 3 Rosellas? Or can one go long, for example with a Bullish morning star as it rides the upper BB or a Bearish Engulfing as it rides the the lower BB?
No!!
Do not do that!!
At first look your suggestion seems correct.
But you must remember that the BB are extreme points, and price action from here tends to return to the centre regardless of whether they are expanding or contracting.
It is in the mathematical derivation - the upper/lower bands are a 2x standard deviation from the 20 period moving average.
Price action, therefore, tends to return to the moving average.
In choosing a pattern on the wrong BB, you are trading two opposing forces and the result is an uncertainty.
It is much [U]better[/U], and [U]safer[/U], to choose a correct pattern to go with the relevant BB.
We are not lacking that many patterns that we cannot do this.
Hi Tymen and everyone!!! Thanks for this awesome piece of art!
Quick question about entries.
What happens when thereās no retrace at all? Do we miss the trade?
Extra question. Iāve been experiencing difficulties recognising quality candlestick patterns, when it seems like Iāve finally found one the next candle forms a different pattern. Where else could I look for some information about this?.
I take it you are talking about the Int/Advanced level.
Not at all. You seek to enter at the best place the starc bands give you regardless of whether there is a retrace or not.
Extra question. Iāve been experiencing difficulties recognising quality candlestick patterns, when it seems like Iāve finally found one the next candle forms a different pattern. Where else could I look for some information about this?.
I do not quite understand what you mean here?
What is this ānext candleā that forms a different pattern??
Thanks a lot Tymen for that answer. Sorry for my english
What I mean whit my candlestick patterns, is that, for instance, I identifty three white soldiers, I enter the trade, but i turns that the candle after the last soldier forms an engulfing pattern and thatās totally the opposite of what I wanted, and that happens often, that once a pattern is formed, the first candle after that formed pattern makes a different pattern along with the last candle of the pattern. OMG I hope Iām not confusing you with my complicated explanation!!
usually the first pattern will win out but pay particular attention to the shape of the Bollinger bands.
If these are expanding relentlessly, then your 3 white soldiers is safe.
But if after the engulfer forms, the BB contracts sharply, then it is likely that the engulfer will win out.
What happens in these cases is ā¦
In trading the Basic or Intermediate level - you will get your 1st amount of 10 pips but no more.
In the Advanced level, you are working your trades into the starc bands, hence you have complete control, as a result you can still make good pips.
Here you see the [U]main chart[/U] with the 3 green soldiers pattern highlighted in the blue oval.
The next candle has already started and it is in our favour since we are going [U]long (up)[/U]
The opening candle is red and going down.
This will give us extra pips as it goes up again.
[B]Note the Bollinger bands - expanding with the mid Bollinger going up.[/B]
Here we have a long entry (buy) of only[U] 1 amount.[/U]
The entry was made at the bottom of the candle but we register 33 because there is a 4 pip spread.
That is why the entry line is higher than the bottom of the candle.
