Trading using Candles Only....

[ceydababy]

The Short Cover Candle and Long Seller Candle......

Apologies for the delay in posting more on this thread.

I look for the short cover candle when the market is approaching a support area and the long seller when the market is approaching resistance areas.

This is telling me that the market may turn at this point because the shorts are covering or the longs are selling out.

If I am in a position when I see one of these bars I generally wait to see a reversal pattern form before exiting. I would always put my stop above/below the tail of the candle as a precaution.

If you are scalping you can get some really excellent entries using these bars. I have highlighted a few on this chart.

Another area where you can get these bars forming will be around trendlines. The better signals are as the 1 minute approaches a 10 minute trendline.

Any questions give me a shout.

Once again if anyone requires the original candle formation document I am more than happy to email.

 

[ceydababy]

Descending Triangle Plays.......

OK, I should make it clear I'm not Steve Nisson, nor am I George Soros ! I'm just posting the way I trade. It should be made clear that none of this stuff is textbook, well I'm not sure if it's textbook because I haven't read any ! It's just my interpretation and how I trade these particular formations.

I find descending/Ascending triangles can be quite difficult to trade. Often you find that once the bottom goes and you get short the little bugger does a reversal and takes you out.

I trade Ascending/Descending triangles as follows.

INSTEAD OF WAITING FOR THE TRIANGLE TO BREAK AT THE BOTTOM, I GET IN AT THE TRENDLINE. ON THIS EXAMPLE THE BEARISH ENGULFING GOT ME SHORT. AS WE APPROACH THE BOTTOM (SUPPORT LINE) OF THE TRIANGLE THIS IS WHERE IT CAN GO AWRY. ON THIS OCCASION IT WENT THROUGH LIKE A HOT KNIFE THROUGH BUTTER NETTING ME 30POINTS IN THE PROCESS. HOWEVER, STOPS WERE TIGHT INCASE OF A REACTION TO THE BREAK OF 90. NOTICE HOW THAT DOWN TRENDLINE WAS CAPPING RALLIES TOO. THIS GAVE ME ADDED CONFIDENCE THAT THE END WAS NIGH FOR THE 90 SUPPORT.

 

[MrGecko]

Good work

 

[ceydababy]

Ascending Triangle......

Pretty much the same as a descending except we're looking for longs only.

I would add that I really look to only trade these on the 3rd touch of the trend line. This goes for descending triangles too. I remember a conversation I had with TraderDante when he joined Futex and he was saying most of the guys there only look to trade the 3rd touch of a trendline. If it's good enough for them it's good enough for me. None of this get in early for a couple of extra points rubbish.

So remember, 3rd touch confirms the trendline.

On this example we have a pin off the trendline and the entry should be on the following bar.

 

[Silversea]

OK, I should make it clear I'm not Steve Nisson, nor am I George Soros ! I'm just posting the way I trade. It should be made clear that none of this stuff is textbook, well I'm not sure if it's textbook because I haven't read any ! It's just my interpretation and how I trade these particular formations.

I find descending/Ascending triangles can be quite difficult to trade. Often you find that once the bottom goes and you get short the little bugger does a reversal and takes you out.

I trade Ascending/Descending triangles as follows.

INSTEAD OF WAITING FOR THE TRIANGLE TO BREAK AT THE BOTTOM, I GET IN AT THE TRENDLINE. ON THIS EXAMPLE THE BEARISH ENGULFING GOT ME SHORT. AS WE APPROACH THE BOTTOM (SUPPORT LINE) OF THE TRIANGLE THIS IS WHERE IT CAN GO AWRY. ON THIS OCCASION IT WENT THROUGH LIKE A HOT KNIFE THROUGH BUTTER NETTING ME 30POINTS IN THE PROCESS. HOWEVER, STOPS WERE TIGHT INCASE OF A REACTION TO THE BREAK OF 90. NOTICE HOW THAT DOWN TRENDLINE WAS CAPPING RALLIES TOO. THIS GAVE ME ADDED CONFIDENCE THAT THE END WAS NIGH FOR THE 90 SUPPORT.

I see that same pattern in the ES quite often. You are right in that it can get "awry" because as you notice everytime price hit that support at 3,991 it bounce back up. So after it tested 4,008 to form a double top, it came back down to hit that 3991 three times. Many times after it breaksdown it will come back up to retest the same level before it continues down further, which is a second chance for a SHORT Entry with a tight stop.

 

[ceydababy]

The spinner........

This is one of my FAVOURITES. It generally always nets you a result. Again the way I trade this is probably not textbook !

I look for spinners as we enter support and resistance areas. I read a spinner as trader indecision.

The other time I will look for spinners is as the 1 minute pulls back and gets ready to go in the way of the 10minute trend. They really can be DYNAMITE.

I always wait for the HIGH or LOW of the spinner candle to be breached BEFORE ENTERING A TRADE. NO EARLY ENTRY FOR THE EXTRA COUPLE OF POINTS.

If we can get a spinner that's also an inside bar it adds more strength to the move

 

[ceydababy]

The pattern failure.........

Probably one of the first things we learn as traders is the head and shoulders pattern. I actually find these quite hard to spot so don't often trade them.

However, I find that when one of these patterns fail the move can actually be better than the H&S working out...Crazy I know and for the sake of naysayers my opinion only

 

[brutusdog]

someone had some time on their hands tonight!

 

[ceydababy]

someone had some time on their hands tonight!

Yes mate, how did you guess ! It was either help the gfriend paint the bathroom or look busy doing something else. I chose the later !

Catch you in an hour.

 

[Mr Squirrel]

I was reading this thread and gave it a go on the 'Wall Street 30' in my demo account. Got myself 25 points in minutes! I admit, I had no exit plan and could have made more if I'd known what I was doing, but 25 points is not to be grumbled at. I was just glad to have been able to read the signs correctly.

I'm a complete newbie to this and am trying to get myself an armory of methods together to try out and see if I can actually do it. I have some questions though...

To get my first properly earned 25 points, I used the first example in this thread in reverse to predict a long. How do work out how long you think it'll run long for? Or do you just set out with a punt on how many points you'd like to gain? (No offense, I'm sure it's more than a 'punt'.) To attempt to answer my own question, is this where a longer term chart would be used with support and resistance methods? Finally, could I have used the 3/10 Oscillator to confirm price momentum in conjunction with your example just to double-check it was going to do what I thought...?

Stephen

 

[Silversea]

I was reading this thread and gave it a go on the 'Wall Street 30' in my demo account. Got myself 25 points in minutes! I admit, I had no exit plan and could have made more if I'd known what I was doing, but 25 points is not to be grumbled at. I was just glad to have been able to read the signs correctly.

I'm a complete newbie to this and am trying to get myself an armory of methods together to try out and see if I can actually do it. I have some questions though...

To get my first properly earned 25 points, I used the first example in this thread in reverse to predict a long. How do work out how long you think it'll run long for? Or do you just set out with a punt on how many points you'd like to gain? (No offense, I'm sure it's more than a 'punt'.) To attempt to answer my own question, is this where a longer term chart would be used with support and resistance methods? Finally, could I have used the 3/10 Oscillator to confirm price momentum in conjunction with your example just to double-check it was going to do what I thought...?

Stephen

How do work out how long you think it'll run long for?
Translation: How do YOU calculate or project forward the target exit or how far price will go in favor of the trade?

Answer: The most simple and straight foward method used by most experienced traders ( me included) is to target the nearest swing High or Low for your EXIT or calculate or estimate two times the risk of your trade.

Hope this answers your question, Mate.

Bon Voyage !

 

[level_head]

I too think this is one of the better threads I've read on here in a while, although I have to admit I'm only an occasional visitor. I was attracted to this thread due to the title: "Trading using Candles only". I have been looking at Candlesticks for many years and have just had a book on the subject published. The crux of the whole book is that candles are better than bars because they ARE more emotive, but this makes the reading of the price action easier, which is surely the idea of a chart?

But the other thing that I tried to make a point of throughout the book is that Candles should never be used on their own. Nothing in TA should. Trading and Analysing the markets using Technical Analysis is a journey to find the collection of methods that come together and work well for you as an individual, on your time frame, for your product.

This sounds like a bit of a cop-out but it isnt; I'm saying "This is going to be hard work". Trading isnt easy, as most of the old heads on this site will attest. But I firmly believe that Candlesticks can be a strong ally to anyone who's trying to find a way to read the markets, whatever the timeframe of the chart, and whatever you're trying to trade.

I think Candlesticks are the best "canvas" to start adding confirmation tools upon, if that makes sense.

Saying that, I will agree with the sentiments of a couple of posters here that Candlesticks can't really do a lot for you on really short term time frames, and I tend to avoid reading too much into the shape of individual candlesticks on anything smaller than a 5 minute chart (probably even a 10 minute chart) even on highly liquid contracts/markets.

Best of luck to you all on your trading and I hope this has been some help

Yours,

Clive.

 

[addisor]

candlestick word document

Been following this thread with interest, have been using candlesticks with reasonable success. Has anyone got Ceyadababy word document showing candlestick formations? or any other representations of candlesticks in formation, not just text book single sticks.

thanks

rob