THE JOY OF CANDLESTICK TRADING - Part 2

[BankDaPips]

[B]April 9th 2009, 12:20PM EST BUY[/B]

The first buy candle appeared at a previously hit fib target. A confirmation was later given, followed by a retrace to the lower 0.7 STARC, where I entered and placed stop loss 10 pips below. Exited at FIB target, Hit of upper 1.0 STARC and completion of “W” pattern, for 41pips.

How I got FIB target is shown below (50% retracement should target 50%/61.8% extension):

[BankDaPips]

I’ll answer this how I currently am using the system, Tymen, feel free to correct me

In the advanced method I enter as soon as the candle touches the .7 band (.3 if going long), I don’t wait for it to close. I also do not look for any candle patterns in the 5 minute chart, they are useless in this method and are just noise. The key for the 5 minute chart is the STARC bands to help get the best entry and exit points for rolling pips. I switch back and forth to the 30 minute chart occasionally during the 1/2 hour to make sure our pattern is staying true and is not reversing.

I’ve been trading this very conservatively this week (missing a lot of pips but playing it very safe) and have not made a single loss, one break even, the rest up anywhere from 2-3 pips to 20 pips.

The big killer for me right now is the spread, I’ve had good luck with the USDCAD but my spread is anywhere from 5-7 pips :eek:

Mike

[B]Edit:[/B] Also, if the STARC bands are in a serious trend up or down and are going the way I am trading the trend, then I enter when the candle hits the .5 band because the price action is moving strongly in the current direction and rarely in a strong trend does it reverse enough to get to the .3 or .7 bands (long or short) opposite of the direction of the trend.

Hi Mike,

I notice that you are referring to 0.5 and 0.3 STARC levels, is it that you named them as such or are these the actual multiplier settings for each band? I currently have the 2.0, 1.0 and 0.7 STARC bands on my chart. Please let me know.
Thanks!

[xtensive]

It looks like you’ve got it as far as I can tell. Here is a very crudely drawn chart to clarify on my entries because I might be off on the numbers this will hopefully clear the bands up:

Also, my STARC settings are:

MA_Period: 6
ATR_Period: 15
KATR: 1.0
MKATR: .045
Shift: 1

Mike

[BankDaPips]

It looks like you’ve got it as far as I can tell. Here is a very crudely drawn chart to clarify on my entries because I might be off on the numbers this will hopefully clear the bands up:

Also, my STARC settings are:

MA_Period: 6
ATR_Period: 15
KATR: 1.0
MKATR: .045
Shift: 1

Mike

Ok Mike, I see where the STARC bands setting are concerned. I have a question re your chart. What caused u to take a SHORT entry at the point you indicated?

Simone

[xtensive]

Oh I didn’t trade this move at all I just grabbed a quick screenshot of a 5M chart to circle the entry/exit points

I use a bit of discretion with the advanced method because sometimes a very strong trend won’t re-trace back enough to hit the entry marks but most of the time they do re-trace at some point in the trend. It seems very counter intuitive to wait for price to go against you to jump in but it is better than watching it go against you once you’re already in

Mike

[VulcanClassic]

My point is, for me, I have found that using the STARC rules on the 5M ONLY, works pretty well.

Careful with that. I think you still need the candlestick patterns.
You could be trying to enter as per starc rules following the trend, but what about significant pullbacks, where price walks along the starc a while first instead of just touching it and going in your direction.

[BankDaPips]

Careful with that. I think you still need the candlestick patterns.
You could be trying to enter as per starc rules following the trend, but what about significant pullbacks, where price walks along the starc a while first instead of just touching it and going in your direction.

Hi Vulcan,

I still use the candlestick patterns as they appear on the 5M as shown in the examples I have below. I do understand that you will have a few instances like that but again they are so few and risk so small vs the reward of the successful trades. My average pip risk is 10-15 trading the 5m with the same rules. But I do take your point.

Thanks!
Simone

[BankDaPips]

Oh I didn’t trade this move at all I just grabbed a quick screenshot of a 5M chart to circle the entry/exit points

I use a bit of discretion with the advanced method because sometimes a very strong trend won’t re-trace back enough to hit the entry marks but most of the time they do re-trace at some point in the trend. It seems very counter intuitive to wait for price to go against you to jump in but it is better than watching it go against you once you’re already in

Mike

Ok, Cool Cool

[Demonwarp]

Couple of quick questions, I want to post a couple of charts here but I am not sure how to draw the pretty blue transparent circles you guys use to highlight candle patterns ( I only have MS paint).

Any help or a link would be great, I looked around on google but I can find the answer to that specific question, I know it cannot be that hard.

I just want to acknowledge the work put into this strategy. I have been using the basic and intermediate versions and so far been doing pretty good. I am ready to move up to advanced but it seems Oanda has some limitations which leads me to another question or 2.

First I just wanted to know what everyone uses for there Bollinger Band settings on their 20-60 min charts verses the 5 min chart. Are you using the same settings or something different? In oanda the default is 14, 2. I was told it should be 20, 2.

The main reason I ask is that my setting seem correct but my bands seem to not be as fluid. Is this just a limitation of the charting software? Here is a 5 min chart:

Here is another pic, of my entire desktop, again my bands do not even seem close to as fluid or clean as some other charts I have seen, specificly tymen1’s charts.

(5m chart on left, 30m chart on right)

and zoomed out charts:

I really dig Oanda, I have tried a few other brokers and I find that I prefer Oanda, I think it has alot to do with trading right inside my chart, with super easy to read order tickets and easy to manipulate stops and limits and trailing stops.

If anyone else is using oanda please let me know how you have your studies set up or a good recommendation.

The 2nd problem with Oanda’s charts seems to be that I cannot use a second STARC band with the .7 outer limits. It could be possible I do not clearly understand how to set up STARC bands.

I have 3 numbers I can edit…here is the page at Oanda that explains what the parameters are:

STARC - OANDA FXTrade

It would seem Oanda has decided not to let its users modify the ATR below 1.0 so it would seem I am screwed with the double band setup correct?

Thanks

Justin

[xtensive]

One more post about the STARC entry points just to make sure I’m not misrepresenting the spirit of this method! This is a quote from Tymen from page 9:

Starc Band Trading Rules

1. When trading level…

Short entries upper 0.45, exits lower 0.45
Long entries lower 0.45, exits upper 0.45.

2. When trading Starc going up…

Long entries mid band, exits upper band.
Short entries - nil.

3. When trading Starc going down…

Short entries mid band, exits lower band.
Long entries - nil.

4. Bollinger band approaches…

Wait until direction of Starc band is clearly seen.
If Starc follows (co-linear with) Bollinger band, then get best entry and do not exit until Starc band breaks away from Bollinger.
If Starc band does not follow Bollinger band, then the above 3 rules are relevant.

This is what I try and follow but in the heat of battle sometimes the rules get fudged a bit due to nerves, anticipation, etc.

Mike

[trem]

One more post about the STARC entry points just to make sure I’m not misrepresenting the spirit of this method! This is a quote from Tymen from page 9:

This is what I try and follow but in the heat of battle sometimes the rules get fudged a bit due to nerves, anticipation, etc.

Mike

Mike,

These rules have been superseded by the new ones IE those that contain 0.7 starc band. Careful to not mix the two.

[trem]

Hi Mike,

I notice that you are referring to 0.5 and 0.3 STARC levels, is it that you named them as such or are these the actual multiplier settings for each band? I currently have the 2.0, 1.0 and 0.7 STARC bands on my chart. Please let me know.
Thanks!

Actually Mike was incorrect. He referred the mid band as the 0.5, and the lower 0.7 as the 0.3. The mid band is not 0.5, but actually 0 (MA + 0ATR). The upper band is 1.0 (MA + 1ATR), and the lower band should be -1.0 (MA - 1ATR). So the upper 0.7 is 0.7 (MA + 0.7ATR), and the lower 0.7 is -0.7 (MA - 0.7*ATR). You can see this from the source code of the STARC band that Husky 1 posted.

This is really splitting hair, but can create confusion nonetheless. Sorry Mike.

Simone, you can stick to your original Starc band. Just curious, what’s the 2.0 band for? Thanks.

MA = Moving Average
ATR = Average True Range

[xtensive]

Sorry guys, I don’t want to spread outdated or incorrect info, I’ll sit on my hands.

I do however still adhere to those original rules I quoted from page 9 of this thread, they seem to work better for me personally. I often miss out on the first wave if I wait for the price action to retreat back to the 0.7 (MA + 0.7ATR), or -0.7 (MA - 0.7ATR) bars depending on if you are going short or long. Do any of you experience that? It usually DOES retrace at some point but I miss the first movement in my preferred direction. It also depends how strong the reverse is or how quick it happens, so that may be part of my problem as well…still learning!

I’ll sit back and be a quiet behaved student, sorry again for confusing things with outdated rules!

Mike

[tymen1]

Just quickly here.

I am on Easter holidays as you might guess.

I will reply in detail to all the latest posts on Tuesday.

For now I must emphasise the use of only the 0.7 and 1.0 Starc bands.
All else is outdated.

The idea of using the starc bands on their own in the 5 minute chart [U]does not work.[/U]In the end you will lose more than you gain.
I will reply to this in detail on Tuesday.

Just realize that I have properly and thoroughly tested everything that is on this candlestick thread and I leave no room for doubts.

[4watever]

YO. i heartily agree with Mr. Ty-men

[Demonwarp]

I have just a quick question for the guys on here that are posting edited charts:

How do you guys put the transparent blue oval over your candle stick patterns? I have ms Paint only and I know that has to be a way to do it but I cannot find the answer on the web anywhere. I feel I am missing something very easy but for the life of me cannot figure it out!

Thanks

[BankDaPips]

I have just a quick question for the guys on here that are posting edited charts:

How do you guys put the transparent blue oval over your candle stick patterns? I have ms Paint only and I know that has to be a way to do it but I cannot find the answer on the web anywhere. I feel I am missing something very easy but for the life of me cannot figure it out!

Thanks

Hey Demonwarp,
What platform are you using? Does the platform allow you to create drawing objects like circles etc? If so you can add it to your chart and modify the fill color properties. That is what I do, using VT Trader.

Simone

[BankDaPips]

Just quickly here.

I am on Easter holidays as you might guess.

I will reply in detail to all the latest posts on Tuesday.

For now I must emphasise the use of only the 0.7 and 1.0 Starc bands.
All else is outdated.

The idea of using the starc bands on their own in the 5 minute chart [U]does not work.[/U]In the end you will lose more than you gain.
I will reply to this in detail on Tuesday.

Just realize that I have properly and thoroughly tested everything that is on this candlestick thread and I leave no room for doubts.

Ok Tymen,
Was not trying to reinvent the wheel, just trying to play with what I observe. Looking forward to your feedback tomorrow.

Simone

[BankDaPips]

Sorry guys, I don’t want to spread outdated or incorrect info, I’ll sit on my hands.

I do however still adhere to those original rules I quoted from page 9 of this thread, they seem to work better for me personally. I often miss out on the first wave if I wait for the price action to retreat back to the 0.7 (MA + 0.7ATR), or -0.7 (MA - 0.7ATR) bars depending on if you are going short or long. Do any of you experience that? It usually DOES retrace at some point but I miss the first movement in my preferred direction. It also depends how strong the reverse is or how quick it happens, so that may be part of my problem as well…still learning!

I’ll sit back and be a quiet behaved student, sorry again for confusing things with outdated rules!

Mike

Thanks Mike…that is what forums are for so we can help each other. We are all learning everyday.

Simone

[Demonwarp]

Hey Demonwarp,
What platform are you using? Does the platform allow you to create drawing objects like circles etc? If so you can add it to your chart and modify the fill color properties. That is what I do, using VT Trader.

Simone

Hi Simone

I have windows Vista and it comes with Paint. I can draw circles with specific colors but my options seem to be either just a border with the highlighted color palate color or an opaque circle completely filled in with the highlighted color palate color, I can not get it to be transparent in my highlighted color.

Justin