Intraday Candlestick Trading

[brownsfan019]

	Quote:	walterw
	In that case momentum discernment may come handy to switch exit methodolgies... one simple method I use to discern mometum and change this "sensitivnes" on the exit management is to see how prices drive far from the keltners... on that case I asume momentum is showing its paws, when market strugles to go far outside from keltners we can asume a cycle condition (wich actually is the norm in the market) and scalping fixed exit strategies may give better results in this case... key for that kind of exits is to ensure a good minimal RRR of 1:1.5 at least... cheers Walter.

I think I can see it... a few examples would be great. I'm a very visual person. Probably why candles work for me. I like the pretty colors.

[walterw]

yes some examples... actaually on tick charts at smaller timeframes this readings get more amplified...





just a very simplified concept... if price action is contained by keltners, we are in cycle... cheers Walter.

[brownsfan019]

RE: Keltners - I see what you mean. I actually used Keltner's for awhile at one point for this very idea. Here's the one issue in real-time - you don't know if it will break outside the band till well after the fact and that can lead to very, very small profits (if any) on trades where the lower band is touched and then snaps back. You could have a resting order to exit there, but then you won't catch the momentum trades as you've illustrated.




So then it comes down to - are you better of just taking your +2 and being content so most of these trades now make money or are you sitting and waiting for the giant move....

More often than not, my research has shown taking CONSTANT profits CONSISTENTLY does so much for the trader - for their account, for their mental state of mind, etc. Constantly winning is a great feeling and cannot be underestimated.

[walterw]

I personaly, (and this may be related to my character) prefer to trade the cycle trades for a fixed exit...its probably the best environment to make profits, and it happens permanently compared to momentum... when the momentum appears its more of an alert state into not aplying cycle scalps and get shaved on a brutal move against me... but basicly all my scalping happens on the cycle condition... ironically the state of the market where most people complaint about and get so confused...

About the psicology of taking profits and not hoping for super moves, I believe its a way of being much more realistic and cash $$$ every other day...

cant beat that sensation, it feedsback confidence to keep trading ¡¡ cheers Walter.

[Anonymous]

Hi BF! Its great to be talking WRBs with you again. I known this is not the WRB thread, but if you're okay with it- I am game.

First, you missed one. Check out the large white candle just prior to the Test candle. That's a WRB. Quick definition for those reading this, a Wide Range Body is one where the body (open to close) is greater than the prior three (3) bodies. Therefor 4 candles are involved. One can choose more candles like 4 or 6, but 3 seems to work best and three (3) is the least ammount one should use. Also note that it appears that BF has highlighted the candles next to along with the WRB itself.

Now, based on what I have been saying in the VSA thread, there are only two trade set-ups. What this chart does not show is a No Supply that forms within the shadow of the Long Shadow of the hammer line. Hence, for me, most of the WRBs are going to be ignored as no VSA signs are within their bodies. As already pointed out, the No Demand on top of the S/R zone was confirmed by action on a higher timeframe. This is not the case with the Test candle, so despite the fact that we get a beautiful Test (hammer) within the range of a WRB, it is not taken.

On what makes one WRB more significant than another.
1. Volume associated with WRB. The more volume the more significant.
2. Size ( sorry, guys but size does matter here too).
3. Was the WRB created on a news related event? A WRB created on the release of the jobs report is more significant than a WRB created 2 hours later over the lunchtime for example.
4. Location. A WRB that forms at an old high is more significant than on that appears where there are no obvious areas of support or resistance.

[BlowFish]

	Quote:	brownsfan019
	As we've discussed in the chat room, the real key here is actually how/when to EXIT. There are plenty of trades we saw that went +2 (or more). Of course we want to stay in the winners longer and get out when it's not there, but easier said than done. So I think the entry thing is good, but I actually think the exit plan is MORE important with candlestick trading. Take my opinion for what it's worth.

I'd go further - The exit plan is MORE important (compared to the entry that is) with all types of trading.

Why not use the candles for exits too? So for example a hammer forms 'against' you and then price breaks out so exit - or even reverse if you are scalping walter style

If you are long and each candle is green and making higher highs and higher lows there's really very little reason to get out. (I should say that over and over for my own benefit!!) Actually I think it was Tom Williams (of VSA fame) who said something along the lines of at least stay in until you get a lower close.

[walterw]

Higher high and lower lows only happen in trending momentum conditions, on cycle conditions aplying that concept a profitable cycle trade/scalp will eventually become a stop... that so far my experience... cheers Walter.

[BlowFish]

Indeed Walter, though I thought those where the moves that Brown was wanting to catch. (not so sure now you mention it ).

Sitting through coils and such is likely to be necessary to catch the bigger moves unless you 'shift gears'.

Edit: quickly recognising changes in market condition is quite a valuable skill for a trader.

[brownsfan019]

	Quote:	BlowFish
	I'd go further - The exit plan is MORE important (compared to the entry that is) with all types of trading. Why not use the candles for exits too? So for example a hammer forms 'against' you and then price breaks out so exit - or even reverse if you are scalping walter style If you are long and each candle is green and making higher highs and higher lows there's really very little reason to get out. (I should say that over and over for my own benefit!!) Actually I think it was Tom Williams (of VSA fame) who said something along the lines of at least stay in until you get a lower close.

BF - good idea on the candle thing, however candlesticks do not provide timely exits. Waiting for a reversal will cause many trades to 'give too much back' in my experience. Higher highs, lower lows sounds good on paper, but again, back to the 'give too much back' by the time a stop is hit. For example, if trading on the 5 min chart, there can be some decent price action to cause a higher high but by the time you trail a stop, you can literally give back POINTS.

[walterw]

I wasnt following anymore today the market when this gorgeous doji did his job...



today was very nice the amount of good setups we had like this...

funny, if you taked the es signals into ym at the same time, ym was VERY profitable today.... nice work here Brown ¡¡ cheers Walter.