I am now going to post the candlestick patterns to trade for this method.
The main features to look for in each pattern will be shown…
In this pattern the red candle must be at least 50% of the length of the long green candle.
I gave instructions how to manually convert timeframes, but I don’t remember posting a file. I think someone else may have done that.
There are 6 patterns in all. The list is now complete.
The first 3 are traded on the upper Bollinger band while the last 3 are traded on the lower Bollinger band.
The 6 patterns traded are all [U]reversal patterns[/U].
Readers have found the [U]continuation patterns[/U], namely the 3 green soldiers and 3 red rosellas to be unreliable.
Therefore, I have eliminated them from our trading method.
(For use in the final PDF)
The Principle of the Candlestick Trading Method for both Basic and Advanced Levels.
In the diagram, the Bollinger bands are drawn in blue.
The shorting patterns and price action are drawn in red, the long patterns and price action in green.
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.
When prices are at the extreme of the Bollinger bands, the price action is much more likely to go only one way, that is, into the centre.
We know that when a candlestick pattern appears, it indicates that price action is about to go in one particular direction.
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.
Of course, we can trade our patterns past the mid Bollinger band thro to the opposite band to make a greater profit if the opportunity is there to do so.
(for use in the PDF)
The above trading principle into the centre does not work if the Bollinger bands are expanding.
See the drawing below >>>
The green line shows price action going up and the red shows price action going down.
The dotted green and red lines show the price action as we wish it to go in order to generate a profit.
But in this case the price action is stalled for a time, possibly going down slightly, but generally level.
After a few candlesticks, the price action resumes its original path of walking the Bollinger bands.
Trading the patterns in these conditions would incur a terrible loss.
In a case of expanding Bollinger bands, the solution is to wait for 2 of the same patterns occurring in a row (long/long or short/short) as in the diagram below >>>
If 2 patterns in a row does not occur, then the trade must be avoided to prevent an inevitable loss.
(for use in the PDF)
In order to generate consistant trading, the outer Bollinger bands need to be level or preferably going inwards.
Going inwards is the best situation.
[B]The direction of the Bollinger band on which the trade is placed is all important and vital to the success of the trade.
Checking the Bollinger band direction is just as important as spotting one of the candlestick patterns.
A good candlestick pattern on a Bollinger band that is wrongly directed spells disaster for a trade!![/B]
Now let us look at the mid Bollinger band…
The mid Bollinger band should preferably be at least level.
However, sometimes it is possible to see the mid BB slowly turning around from a position of against the trade to a position to favour the trade.
If you can see this happening, then your trade has a potential for success.
The more the mid BB is turned in your favour, the more confident you can be about success in your trade, long or short.
Remember that you can trade past the mid BB to the opposite outer BB if the trade permits.
This will generate much greater profits.
The above details are shown in the following diagram >>>
Greetings one-and-all
I am partially through the first thread in this series, a Learning Experience, and I am [B]MASSIVELY [/B][B]IMPRESSED[/B] by the generousity of you, Tymen. The amount of time you put into teaching the rest of us is mind-bending. It is [I][U]sooo[/U][/I] refreshing to see there are still unselfish people in this world. Many, many kudos and thanks to you, Tymen.
To my problem–I am struggling to find the patterns required. It seems it is rare for an evening star to be on an upper BB, and even if it is, by the time the third confirming candle is complete the price is back in the middle of the BBs. Perhaps an adjustment of BB & Keltner settings will help? What are the ideal settings for the evening star setup?
Perhaps someone could list a few of the patterns that have appeared this week (since Sunday). Please give the times in GMT, if you could be so kind. I am on Pacific time (Washington State, USA), and it is truely a pain. At any rate, I haven’t seen anything that looked very good.
Many thanks again, Tymen, and all who share,
PotaireI’ve created a quick .PDF of your screenshots, printed them out and tacked them to the wall above my computer. It has already helped keep me out of some bad trades.
Just made a quick 8 pips on the USD/CAD, posting screenshots…
Tymen Patterns and Rules.pdf (370 KB)
Thanks for making a pdf outa them, Dodge. Was hoping for real screenshots–I’m anxious to see your chart for the 8 pips you got today. I’d like to see some of the stuff I’ve missed in the last 24hrs.
Potaire
I got a little click happy with this trade I think. The reversal candlestick was clear, but I didn’t wait for 2 of them. I’m hesitant to post trades that don’t follow the rules, but I’ll leave that up to Tymen1 to tell me to stop.
Here I am waiting for the 5 min chart to reach my entry. I’ve circled the reversal pattern on the charts. The 30 minute and 20 minute charts don’t clearly show the pattern, but the 25 minute chart does.
Almost there!
I’m in
And I’m out about 5 seconds after this picture it hits the bottom Starc line.
Interesting!! I’m looking at the same chart as your 30M–IBFX doesn’t have 20 or 25M. The pattern is VERY clear on the 20 & 25. This all happened within the last couple hours, correct?
Potaire
(PS–I entered long at 0805, with a penny-a-pip, just to see if main trend continues)
I entered again for +10 pips.
How it looked when it was over.
I’m using IBFX too, use the period converter in the .zip file a few posts back to get the other time periods. I will post detailed instructions on this…
Love the Candlestick patterns. Printed and on my wall!
I started a couple hours before NY open and it seemed like all the major pairs were set on going up or down and then after 12pm EST they just kind of went sideways.
Is it me or was there a lack of patterns today?
I suggest open a mini/micro account and use real money, invest a very small amount, but it will help for the nerves later.
demo accounts are fine for a week with there inflated “monopoly” money but then you need to get your feet wet. 
Oh I am very much aware of this! I only use my demo account to test new strategies. I’m still getting used to Tymen1’s method 