THE JOY OF CANDLESTICK TRADING - Part 2

[muthusai2000]

Funny thing is, I have not been in this thread in a while. I was just cruising around and saw the post.

As far as implementing the script:.

1. Open notepad on your computer.
2. Copy the code in the white box that you posted
3. Go to File “Save As”
4. In the name box type “Husky_Double_starc.mq4” (Use the quotes, as it will save it as .txt if you do not.
5. For the location you will go to C:\program files<Name of your metatrader folder>\Experts\indicators…
6. Once save in their, you can close notepad.
7. Now go to the above directory and you should see the file,double click it and it should open in Metaeditor.
8. Hit the compile button and now it should show up in your custom indicators.

Dear Husky,
Thanks for posting the double starc code…I was trying to figure out how to put it on my ibfx mt4 for the past few days and your post came in as a saving grace. Thank you In da for asking about it and Tymen I am reading the second thread now…hope to catchup to page 70 soon…
Regards,
Muthu
Chennai
India.
[I][I][I]“A Candle loses nothing by lighting another”[/I][/I][/I]

[muthusai2000]

Dear Tymen and other friends,

I am on page 43 in this thread and I just wanted someone to correct my settings for my Husky_double starc MT4 indicator. The following is my setting

MA_Period = 6
ATR_Period = 15
KATR = 1.0
MKATR = 0.7
Shift = 1

Can some one be kind enough to correct these settings ? I am planning to do few trades very soon.

Regards,
Muthu
Chennai,
India.

[tymen1]

MA_Period = 6
ATR_Period = 15
KATR = 1.0
MKATR = 0.7
Shift = 1

I am not sure what the “shift” is about, but all the other settings are correct.

[muthusai2000]

I am not sure what the “shift” is about, but all the other settings are correct.

Dear Tymen,
Thank you for the help. This is MT4 setting and i hope “Shift” parameter value is enlightened to me by other friends who may be using it (I am working on IBFX demo MT4)

Thanks again,
Muthu
Chennai,
India.

[tymen1]

…
(I am working on IBFX demo MT4)

I hope you can live with MT4.

It is not exactly the best or most user friendly forex programs for trading with candlesticks.

Many of my devotees switched to the vastly superior Dealbook program.
However, if you can succeed with MT4, good for you!!

[muthusai2000]

I hope you can live with MT4.

It is not exactly the best or most user friendly forex programs for trading with candlesticks.

Many of my devotees switched to the vastly superior Dealbook program.
However, if you can succeed with MT4, good for you!!

Hello Tymen,
I have read about this in the previous thread as well. I dont know if they allow people from India to open demo acct with deal book. Besides I am planning to demo trade for atleast 3 to 4 months from now. Will they let me use their demo platform till that time i wonder ? Please let me know what can be done.
Tx
Muthu.

[Blaiserboy]

@muthusai2000

Hello Tymen,
I have read about this in the previous thread as well. I dont know if they allow people from India to open demo acct with deal book. Besides I am planning to demo trade for atleast 3 to 4 months from now. Will they let me use their demo platform till that time i wonder ? Please let me know what can be done.
Tx
Muthu.

You could have a look at ninja trader… it is free… and allows free feed from forex.com.

Both deal book and ninja are memory hogs… but definitely better for seeing what you need to see re this method

[onecent]

Tymen- Thanks so much for all of your work here but can we finish this thing already? LOL

I knew I was hooked on candlesticks when I finished the entire part 1 in just under two days.

Question:
Something I have been wondering throughout the entire part two is the entry. You have always said to enter on the .7 starc band. Especially on short entries when switching to the M5 chart it seems the majority of the time, price action always goes to the upper 1 starc band. Can you fill me in as to why we aren’t shooting for this starc instead which in my mind would get us an even better entry?

Thanks again and keep up the great work looking forward to new examples.

Regards,
Sean Mathes

[muthusai2000]

Tymen- Thanks so much for all of your work here but can we finish this thing already? LOL

I knew I was hooked on candlesticks when I finished the entire part 1 in just under two days.

Question:
Something I have been wondering throughout the entire part two is the entry. You have always said to enter on the .7 starc band. Especially on short entries when switching to the M5 chart it seems the majority of the time, price action always goes to the upper 1 starc band. Can you fill me in as to why we aren’t shooting for this starc instead which in my mind would get us an even better entry?

Thanks again and keep up the great work looking forward to new examples.

Regards,
Sean Mathes

Hello,
If my understanding is right, I think we can reserve a second lot (if we dare to enter a second time) for the 1 starc band and still follow the traditional entry at 0.7 for the first lot. I reserve the right to be wrong

Thanks,
Muthu
Chennai,
India.

[muthusai2000]

@Blaiserboy

You could have a look at ninja trader… it is free… and allows free feed from forex.com.

Both deal book and ninja are memory hogs… but definitely better for seeing what you need to see re this method

Thank you Blaiserboy for your kind guidance. Will have a look in to it. Did i enter the forum a bit too late ? Looks like there is not much activity. I hope i will still be able to make it. I had a short trade yesterday using Tymen’s, method.
(gmt time) it was a evening star in 30 min tf and i managed to grab 13 pips using the advanced method.
2009.07.27 12:51 sell 1.00 eurusdm 1.42701
2009.07.27 13:22 1.42576 0.00 0.00 0.00 12.50

Thank you Tymen.

Muthu.

[tymen1]

Hello,
If my understanding is right, I think we can reserve a second lot (if we dare to enter a second time) for the 1 starc band and still follow the traditional entry at 0.7 for the first lot.

You have got it correct [B]muthusai2000[/B].

The 2nd entry improves on the 1st and can even be well beyond the 1 starc band if the price goes that far.

[tymen1]

[B]Here is a case of a trade which you would want to avoid!! [/B] :eek:

By tymen1 at 2009-07-28

We know that evening stars are traded short (down).

Now the evening star is not even on the upper BB so that alone rules it out.

But even if you did want to trade this one, we look at the upper BB and see that it is expanding - [B]dangerous!! [/B] :eek:

Then the mid BB is going up powerfully so that definitely rules this potential trade out.

[tymen1]

Let us look at the corresponding 5 minute starc chart >>>

By tymen1 at 2009-07-28

Here we see the starc bands heading down - very promising.

But look at the mid BB - going up.
This makes this thing too dangerous to trade. :eek:

[tymen1]

Now let us look at the result on the [U]main chart[/U] >>>

By tymen1 at 2009-07-28

Wow!!

The price action went down after all.

And with a nice profit too!!

[muthusai2000]

Dear Tymen,
Thanks for the last trade. It shows how uncertain this market is and it is always good to stick to the rules. I almost gave up forex trading until i started reading this thread. I hope we will get more examples to hone our skills and take the bulls and the bears.

Regards,
Muthu,
Chennai
India.

[tymen1]

Here is the same result on the 5 minute starc chart >>>

By tymen1 at 2009-07-28

So what have we done wrong??

[B]Answer [/B]- Nothing.

We have traded correctly.

[U]Not trading is a position!![/U]

The price action here could also have gone the other way.
In fact there is no support or resistance line anywhere in sight that could have alerted the naked chart trader either.

This downward move could not have been predicted.
Further, the pattern was not on the upper Bollinger band, thus ruling it out.

[B]The purpose of this post[/B] - We are not here to [U]gamble[/U].

If we had indeed entered a trade here, and the price action continued up, we would have lost the trade.
Since we have no way of knowing for certain which way the price action would go, entering here would only amount to gambling.

[B]We need better probabilities before we enter.[/B]

[U]For an evening star, we need to see …[/U]

1)the pattern clearly on the upper Bollinger band.
2) the upper BB going flat and not up.
3) the mid BB going down or getting ready to go down. (at least level).
4) on the 5 minute starc chart, we need to see the mid BB definitely going down, level at the very least (even this is a risk).
5) a resistance line on the main chart at this point is an added bonus but not essential.

By checking these things, we are putting the probability of success firmly in our favour.
We are like the naked trader who has confirmed a reversal at a clearly seen resistance line.

Only after these matters are confirmed do we enter a trade.
Then we can be very sure of profit success.

[Blaiserboy]

Thanks for posting those charts… you make things so very clear…!

[tymen1]

[B]OK, more examples!![/B]

Here is a tricky one >>>

By tymen1 at 2009-07-29

We have the Cable on a 35 minute main chart.
This morning star pattern barely on the BB, directs us to trade [U]long (up).[/U]

The next candle is a red one - to be expected - it is a retrace.

Now the high is all you would get out of it.

[U]So what is wrong with this trade?[/U]

Well, you can see that the mid BB is going down for a start, and that is on its own good enough to have great doubts about this trade. :eek:

The price action has departed from touching the lower BB, therefore, this is a classic case of [U]needing 2 shorting patterns to be successful.[/U]
One pattern just interupts the downward trend, but this trend starts again soon.

[B]In any case, lets have a look at the 5 minute starc band chart.[/B]

[tymen1]

On this 5 minute starc band chart we see the entry candle given by the vertical black line >>>

By tymen1 at 2009-07-29

Labels are placed on the chart.

At the black line, everything is in your favour…

…the mid BB is going up (long),
…the starc bands are going up.

So we wait for that green candle to go down and touch the lower 0.7 starc band to get our great entry.
But…it does not get there!! :eek:

The fact is that when the starc bands are going up or down very steeply as is the case here, then [U]your best entry is at the mid starc band[/U]

AND NOT

at the 0.7 band.

When the starc bands are going level or near level, that is when the 0.7 line comes into its own!!

In that case the “start” would make an excellent entry - and the exit is shown where the price action touches the upper Starc band.

[B]Lets look further…[/B]

Note where I have labelled “enter here??”

At this point the price action is indeed touching the lower 0.7 band as required. Suppose we enter long here.

[U]This is a somewhat dangerous practice.[/U]
We have the Starc bands now going steeply the wrong way, and we are relying on the mid Bollinger band to tell us that ultimately the price will go up again.
We are entering into an area of conflict here.
And this conflict is something [U]we would really want to avoid.[/U]

As it is, the mid BB did win out and we could exit at the upper starc band where I have labelled "exit??"
However, this would only have got you a profit of a few pips.

[tymen1]

[B]The trades I have shown you are on my Demo account.[/B]

[B]Lets us now summarize…[/B]

1. Keep the mid BB in your favour on the main chart.

2. If there is a trend walking the outer BB, then 2 patterns are needed to break the trend and go with the candlestick pattern.

3. Make sure the mid BB is [U]definitely in your favour[/U] on the 5 minute chart.

4. Avoid having the starc band direction in conflict with the mid BB direction in the 5 minute chart.

5. If the starc bands are going up or down steeply, then enter at the mid starc band, or as close as to.
   Remember, you can always improve the 1st entry with the 2nd amount.

AND

If the starc bands are going level or nearly so, then it is possible to enter at the 0.7 starc band.

6. In every case, exits are taken at the opposite, outer starc band.

7. PCI stop losses are set at 3 pips above the extreme wick of the candlestick pattern.