Forums General Discussions Trading made even simpler & some discussions on currency strength

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  • #11498
    Anti
    Participant

      As some members criticized the name of another thread, I decided to start this thread in which I will give some rough ideas on how my trading style is. It is not really simple but it can be used by everbody as you don’t need any programming skills. It’s an admixture of candlestick and prize action trading – but not in its common use.

      Although I know that many people believe that candlestick trading doesn’t work, I guarantee you that it can be profitable. That doesn’t mean that I never struggled in the beginning. However, what I found is that the secret to success is not to know each pattern and trade it but to know when there’s a high change for success. For instance, compare the flagged engulfing patterns in the image below:

      Although the no. 1 engulfing is very strong (as both candles are bigger than previous two bars and bearish candle showed nearly no lower wick), it didn’t work (lead to falling prizes). Why did no. 2 work but not no. 1? Any ideas? Here’s a small hint: It has to do with prior candles.

      I’ll only continue to discuss this topic if there’s enough interest as my time is still very limited …

      • This topic was modified 8 years, 5 months ago by Anti.
      • This topic was modified 8 years, 5 months ago by Anti.
      #11505
      smallcat
      Participant

        Great Anti. Number 1 : the previous candles are bearish (2 red candles before the white engulfing bar). While at number 2:   all previous candles are white (all 3 white candles in a row, including the engulfing bar). But i can be wrong though … :unsure:   Edit : i am agree that to discuss only high probability pattern, not to discuss many patterns. We need only the good one  :good:

         

         

        • This reply was modified 8 years, 5 months ago by smallcat.
        #11507
        Anti
        Participant

          Yes, @smallcat – you are right. Especially the preceding red candle in conjunction with the big bullish one of patter 1 shows me that there could be also a bullish breakout soon for two reasons:

          1. Both form a bullish engulfing.
          2. The long bullish candle of pattern 1 shows me that bulls have strengthened. Its body engulfs the previous two bodies and covers more than one-third of the big upper wick of the second to last candle (spinning top).

          However, do you think it’s only a preceding trend which makes a candlestick valid? Think about the strenght of preceding trend and prize action of single candlesticks …

          #11508
          mak
          Participant

            3rd candle before first patern shows momentum (2x+ bigger). It takes more suply to brake momentum bars, which means, price had to run higher to get more suply.

            #11509
            Anti
            Participant

              @mak: Good point, but that’s not exactly what I want to hear. Maybe it’s too hard to guess. Before I enter I will see market exhaustion. What could signs of such exhaustions be?

              #11510
              BalrogTrader
              Participant

                Large volume + small price change.

                Nothing has ever motivated me more than this...

                #11511
                Anti
                Participant

                  Yes, that’s one possibility. Others are a number of smaller candlesticks, an admixture of bullish and bearish candlesticks forming higher highs/higher lows or lower highs/lower lows, and candles with small bodies in comparison to their wicks. I’ll post some pictures on that topic later on.

                  Please feel free to discuss new ideas or ask questions. There is much more within candles, i. e. info on recent trend or when to trigger signals from candlesticks.

                  • This reply was modified 8 years, 5 months ago by Anti.
                  #11513
                  ZARtrader
                  Participant

                    Please do continue this thread, I don’t have much to contribute as I am still a newbie, but I have much to learn here

                    #11514
                    BalrogTrader
                    Participant

                      Hello all,

                      I don’t want to sound discouraging or a smart-ass but I’d spent a lot of time investigating those “patterns” and even read a whole book about this issue. Apart from Doji pattern, I believe, none of them shows anything reliable. Even Doji fails sometimes, however via accompanying Large Volume, a Doji candle may show something.

                      I really am interested if you found a reasonable interpretation.

                      Thanks a lot for your efforts.

                      Best regards. :good:

                      Nothing has ever motivated me more than this...

                      #11521
                      Anti
                      Participant

                        @BalrogTrader: I know what you are talking about. I had extreme problems to identify most reliable patterns in the beginning and am still sceptical when I read some books or view some videos on this topic. However, you can increase your chances following some rules. For instance, I only go short if the next candle after the pattern candles wents above/below its highs/lows. In addition, you also have to take wicks of previous candles into consideration. Nevertheless, you still can fail. It is not a perfect system – nothing is perfect. But in the long run you can make more profits than losses.

                        • This reply was modified 8 years, 5 months ago by Anti.
                        #11522
                        Anti
                        Participant

                          Ok, let’s summarize. The first condition for a valid candlestick is a preceding trend. The second condition is an exhaustion of the market as mentioned above. Below you can see an example of such an exhausted market:

                          A bullish market ended in the quite long up candle no. 1 (in comparison to previous candles). The next two candles (2 and 3) show only very small bodies but very long upper/lower shadows (indecision candles, spinning tops, or doji – however you want to call it). This is a great sign that bears become stronger in comparison to bulls. Although candlestick 4 engulfs the body of no. 3, I wouldn’t have go short with its close as no. 4 didn’t build a new low. Once candlestick 5 break below the low of first candlestick of the engulfing pattern (no. 3), there is a good chance that we will make some pips.

                          Another example for a weakening is shown here:

                          The candlesticks 1, 2, and 3 build an up trend per definition (higher highs and higher lows, too). After the quite strong up candle (1) two further bull candles form that show recognizable upper wicks. Additionally, the body of each of those candles is smaller than the previous. This candlestick combination is known as stalled pattern and also shows a potential reversal. Finally, the doji (no. 4) indicates indecision for two reasons: 1) the size of it is quite small and thus it neither makes a new high nor a new low (in comparison to preceding candle). Candle 5 opened a few ticks below the close of this doji and closed within the range of no. 1. I’ve opened a short position a few pips below the low of no. 3. (One could have also trade from the break of no. 4’s low. However, the break of no. 3’s low gave me some “extra-certainty”.)

                          • This reply was modified 8 years, 5 months ago by Anti.
                          #11524
                          gg53
                          Participant

                            As some members criticized the name of another thread, I decided to start this thread in which I will give some rough ideas on how my trading style is. It is not really simple but it can be used by everbody as you don’t need any programming skills. It’s an admixture of candlestick and prize action trading – but not in its common use. Although I know that many people believe that candlestick trading doesn’t work, I guarantee you that it can be profitable. That doesn’t mean that I never struggled in the beginning. However, what I found is that the secret to success is not to know each pattern and trade it but to know when there’s a high change for success. For instance, compare the flagged engulfing patterns in the image below:

                            Although the no. 1 engulfing is very strong (as both candles are bigger than previous two bars and bearish candle showed nearly no lower wick), it didn’t work (lead to falling prizes). Why did no. 2 work but not no. 1? Any ideas? Here’s a small hint: It has to do with prior candles. I’ll only continue to discuss this topic if there’s enough interest as my time is still very limited …

                            Basically, you are describing Peak & Troughs, the ClearMethod, which is just the Price Action.

                            You started with the Fractal method. Been there, done that (to a perfection….)…

                            After that you’ll come to a conclusion that you need some more “assurance” or “support” from other methods, like Volume, or market “sentiment”…

                            Good luck, and many green pips on your simpler way…

                            G.

                            #11525
                            Anti
                            Participant

                              Here is a last example on the exhaustion topic:

                              Also relative long candle ranges (in comparison to previous candles) can indicate exhaustion (cf. 1), especially when followed by an indecision bar (no. 2). The high/low of candle 2 can be used for setting SL and to trigger a short position. But why can an extraordinarily long candle be a sign for weakness? I’m not really sure, but a possible explanation could be that it is part of the big player’s game. Maybe these guys buy to immitate a strenghtened trend. Other traders follow, but the money makers now let drop the prize to buy positions of these losers, just to start a new rise to even higher levels. Do you have another explanation?

                              This will be my last post until I see more interest in this topic … I don’t want to talk to an empty room.

                              #11526
                              mak
                              Participant

                                But why can an extraordinarily long candle be a sign for weakness?

                                Climax….lots of times swings/trends end up with momentum bars. Big players are taking advantage of greed/fear of missing out and buy/sell in to those.

                                • This reply was modified 8 years, 5 months ago by mak.
                                #11566
                                Anti
                                Participant

                                  Basically, you are describing Peak & Troughs, the ClearMethod, which is just the Price Action. You started with the Fractal method. Been there, done that (to a perfection….)… After that you’ll come to a conclusion that you need some more “assurance” or “support” from other methods, like Volume, or market “sentiment”… Good luck, and many green pips on your simpler way…

                                  If I’m right you refer to Peak & Trough alone?! I don’t think that my method is exactly the same as Peak & Trough is quite lagging. In many cases pure prize action described above may lead to an earlier detection of (possible) reversals. However, peak & trough (cf. #10201) can be used to check when to trade long or short. Unfortunately P’n’T don’t identify regions with no trend – that would make it even better (as those regions should prevent us to trade but for strong range breakouts = very long candles in comparison to previous bars).

                                  • This reply was modified 8 years, 5 months ago by Anti.
                                  #11568
                                  gg53
                                  Participant

                                    Basically, you are describing Peak & Troughs, the ClearMethod, which is just the Price Action. You started with the Fractal method. Been there, done that (to a perfection….)… After that you’ll come to a conclusion that you need some more “assurance” or “support” from other methods, like Volume, or market “sentiment”… Good luck, and many green pips on your simpler way…

                                    If I’m right you refer to Peak & Trough alone?! I don’t think that my method is exactly the same as Peak & Trough is quite lagging. In many cases pure prize action described above may lead to an earlier detection of (possible) reversals. However, peak & trough (cf. #10201) can be used to check when to trade long or short. Unfortunately P’n’T don’t identify regions with no trend – that would make it even better (as those regions should prevent us to trade but for strong range breakouts = very long candles in comparison to previous bars).

                                    Trend can be identified using Peak & Trough combined current & higher TF’s, such as in simplex histogram indicator.

                                    G.

                                    #11571
                                    simplex
                                    Moderator

                                      Unfortunately P’n’T don’t identify regions with no trend

                                      How about currency strength to identify ‘no trend’ intervals?

                                      s.

                                      A good trader is a realist who wants to grab a chunk from the body of a trend, leaving top- and bottom-fishing to people on an ego trip. (Dr. Alexander Elder)

                                      #11575
                                      Anti
                                      Participant

                                        Well, you know my opinion on currency strength, do you?! :scratch:

                                        #11576
                                        gg53
                                        Participant

                                          Well, you know my opinion on currency strength, do you?! :scratch:

                                          Strange opinion, since it’s my main trading strategy for years…

                                           

                                          G.

                                          #11578
                                          Anti
                                          Participant

                                            Maybe I really used it in the correct way. Mabe it’s the opinion that each lagging indicator is not good. But I will see tomorrow what I can grab … Perhaps I’ve to change my mind. So – as far as I can remember you use alway the strongest currency which is pointing up as well as the weakest which is below 0 and pointing down. Right?! And if conditions are not met than you don’t trade? (Doesn’t mean that there isn’t a trend!)

                                            • This reply was modified 8 years, 5 months ago by Anti.
                                            • This reply was modified 8 years, 5 months ago by Anti.
                                            • This reply was modified 8 years, 5 months ago by Anti.
                                            #11588
                                            gg53
                                            Participant

                                              Maybe I really used it in the correct way. Mabe it’s the opinion that each lagging indicator is not good. But I will see tomorrow what I can grab … Perhaps I’ve to change my mind. So – as far as I can remember you use alway the strongest currency which is pointing up as well as the weakest which is below 0 and pointing down. Right?! And if conditions are not met than you don’t trade? (Doesn’t mean that there isn’t a trend!)

                                              Trading Currency-Strength alone is: Currency A is above 0 and pointing UP, Currency B is below 0 and pointing DOWN, Go LONG on AB pair.

                                              BTW: GOOD Currency-Strength indicator isn’t lagging, but precedes Price-Action by at least 1-2 bars.

                                              If yours is lagging, only trade the Recycle-Bin Market with it…

                                               

                                              G.

                                               

                                              #11589
                                              Anti
                                              Participant

                                                Hmm – I’ve seen in some older posts that there’s also a CS-indicator from you. I think it was called Gadi_Currencies (but not really sure). Is it anywhere available (here or at FF)?

                                                #11590
                                                gg53
                                                Participant

                                                  Hmm – I’ve seen in some older posts that there’s also a CS-indicator from you. I think it was called Gadi_Currencies (but not really sure). Is it anywhere available (here or at FF)?

                                                  Gadi_Currencies is an ancient one, example prototype, shared on FF “Killing Zone” thread.

                                                   

                                                  G.

                                                  #11591
                                                  Anti
                                                  Participant

                                                    Gadi_Currencies is an ancient one, example prototype, shared on FF “Killing Zone” thread. G.

                                                    So, you don’t recommend it’s use, yes?!

                                                    #11593
                                                    gg53
                                                    Participant

                                                      Gadi_Currencies is an ancient one, example prototype, shared on FF “Killing Zone” thread. G.

                                                      So, you don’t recommend it’s use, yes?!

                                                      It will still give you an overview of the FX market, and you have more than enough guidelines on how to make a better one.

                                                      Use my guidelines, and you can profit with it, but I’m using much more enhanced versions. You need to consult lower TF when using that version.

                                                       

                                                      G.

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