Intraday Candlestick Trading

[brownsfan019]

	Quote:	walterw
	Thanks Brown... I think that your 15 min chart really should be king here... I was really captivated with that chart and its performance... so lets start with the 15 min setups... I would like to develop some exit strategies more near to my style probably on smaller timeframes, but setups on 15 min look the best as I see that from your experience (wich is very valuable) trying to setup on smaller timeframes could be a futile game... My first question here... when a hammer doesnt make a mayor follow thru, is it possible to play in the oposite direction ? could that be a good setup ? also, I am very enthusiastic to see how Nison uses "flips" as part of his S&R context strategies... cheers Walter.

Walter,
I have not found much in terms of failed signals on larger timeframes, like the 15 minute. Doesn't mean it can't work, but for me, I've found sometimes a hammer's low is tested and then snaps back. In a scenario like that, you are going to create 2 losers.

The real key is how you exit. In your example above, that could have been a profitable trade depending on how you exited.

Personally, if I would have traded that, I would have been out 3 candles later on the red WRB. In this example, it was a timely exit.

So our discussion can lead to two new threads:

1) Failed signals turned to profitable ones (by reversing).

2) Timely exit strategies to keep most trades profitable and working for your trade.

[walterw]

ok sounds good, so we can explore some new grounds... would this exits be candle based ? or you are interested in exploring some other exit strategies...

cheers Walter.

[brownsfan019]

	Quote:	walterw
	ok sounds good, so we can explore some new grounds... would this exits be candle based ? or you are interested in exploring some other exit strategies... cheers Walter.

Walter,
I'd love to find the most efficient and effective way to exit trades, whatever that may be. Currently it is mainly based on visual WRB's as I've found these to be decent exits on the 15 minute chart. A WRB on the 15 is pretty strong in my opinion. Of course, no exit strategy is perfect (yet) and sometimes you exit 'too soon' or 'too late' in hindsight. Part of the game I guess.

[walterw]

	Quote:	brownsfan019
	Walter, I'd love to find the most efficient and effective way to exit trades, whatever that may be. Currently it is mainly based on visual WRB's as I've found these to be decent exits on the 15 minute chart. A WRB on the 15 is pretty strong in my opinion. Of course, no exit strategy is perfect (yet) and sometimes you exit 'too soon' or 'too late' in hindsight. Part of the game I guess.

Yes I read your entire wrb thread yesterday, found it smart...

One idea that came to my mind was that wrb`s are followed eventually by a small candle, that small candle that follows wrb`s as stated by Nison would first suggest a pause, but not necesarily a reverse on direction, as the trend may resume and continue... so instead of outing at the close of the wrb , my thought was that maybe trailing the extremes of this small candles that follow the wrb could be a way to stay inside... just ideas Brown, very little experience on the subject... only some cronic sick research adiction here.. cheers Walter.

[westhilltrader]

[quote=brownsfan019;26891]west - this thread is to discuss candlestick trading. If you want to start a new thread to discuss how you trade on 1 minute charts with indicators, please do so! How you trade may work for YOU, but that does not mean it's an absolute by any means. I would argue that the 1 minute chart is full of NOISE and that it's not good for daytrading. Neither of us is right as trading is about finding what works for YOU. So please keep that in mind when posting. If you want to share some trading ideas with us, start a new thread and see where it goes. If not, please reserve your comments for threads where you are staying on topic. This thread, is about trading USING candlesticks, NOT ignoring them. Thanks.


Thanks for the comment, Brown.
Here are a few points I would still like to make before moving to another thread:
1. One must listen to both the PROs and the CONs on any topic to get a fair idea whether it is worth spending the time on. There are many beginers here who should hear the CON's and concentrate on learning first the most basic trading methods. As they become more sophisticated, as you seem to be, they can learn and play the pure candles.
2. I do trade with candlestick charts, I wouldn't do without them. The price action which they represent is all I use along with my indicators to arive to critical decisions.
3. The period selection for the intraday trading is market specific. I am trading equities (Toronto Stock Exchange) which, compared with some future charts I see attached here (see James_gsx), are moving much faster. I also
studied Nasdaq and that market moves even faster. Trades on these markets are computer driven and, sometimes, an intraday rally may not last more than five minutes. Any period larger than a minute on these markets would miss half the action. On occasion I feel I coould do with smaller periods but my software is limited down to 1 minute.

Good luck with your thread

[brownsfan019]

	Quote:	walterw
	Yes I read your entire wrb thread yesterday, found it smart... One idea that came to my mind was that wrb`s are followed eventually by a small candle, that small candle that follows wrb`s as stated by Nison would first suggest a pause, but not necesarily a reverse on direction, as the trend may resume and continue... so instead of outing at the close of the wrb , my thought was that maybe trailing the extremes of this small candles that follow the wrb could be a way to stay inside... just ideas Brown, very little experience on the subject... only some cronic sick research adiction here.. cheers Walter.

I agree Walter on your points. Here's what you will see on the 15 minute however - many WRB's appear in your favor and the next 15 minute candle produces a snap back or complete retracement of previous WRB. So for me, I want out at the high/low of the JUST FINISHED WRB, not the one forming that goes against my position. Again, just my observation on the 15 minute. A lower timeframe, like the 3 or 5 minute that you have been looking at, could be very,very different. I struggled with WRB's on lower VBC's so it could be a function of the tiemframe setting.

[BlowFish]

	Quote:	brownsfan019
	....I struggled with WRB's on lower VBC's so it could be a function of the tiemframe setting.

The culprit is the VBC'c. From statistical analysis of the ES and from observation of other instruments, the range of a bar (in a constant time) is highly correlated to the volume of the bar. What this means is a 'WRB' is much much more likely to show as 3 white soldiers / 3 black crows on VBC's.

[brownsfan019]

	Quote:	BlowFish
	The culprit is the VBC'c. From statistical analysis of the ES and from observation of other instruments, the range of a bar (in a constant time) is highly correlated to the volume of the bar. What this means is a 'WRB' is much much more likely to show as 3 white soldiers / 3 black crows on VBC's.

I disagree BF b/c if you load up a 50,000 VBC that is not true at all. The culprit was a LOWER setting VBC. Just like a 1 or 3 minute chart as well. WRB's are subject to some discretion the lower the timeframe setting, whether minute based, volume based, tick based, etc.

[BlowFish]

OK we are making different points I think. The statistics I took (not just looking at a bunch of charts) where from 1 minute 5 minute 15 minute 1 hour 1 day and 1 week charts. These showed absolutely conclusively for of all of those sampling periods that greater volume resulted in greater range.

My point is simply this - WRB's are less frequent on constant volume charts with a similar number of bars to a constant time chart. This is true regardless of 'time frame'. (e.g. comparing daily to N hundred thousand constant volume charts)

They also 'mean' something different (obviously). One means that a candle has gone 'a long way' in a fixed period of time. The other means that price has gone a 'long way' on a fixed number of contracts.

Do you still use constant vol btw?

Anyway leaving constant volume charts aside I'm Interested that you believe lower time frame charts have less clear signals. I know you are using 15 minute ES charts I wonder if you consider there is a 'cut off point' where its all noise? 10 minutes seem pretty safe to me and 5 minutes are OK except when volatility is real low (and you probably want to be sidelined anyway). Mind you if volatility is high 3 minutes seem to get by. Just wondered what your thoughts are?

Cheers.

[brownsfan019]

	Quote:	BlowFish
	OK we are making different points I think. The statistics I took (not just looking at a bunch of charts) where from 1 minute 5 minute 15 minute 1 hour 1 day and 1 week charts. These showed absolutely conclusively for of all of those sampling periods that greater volume resulted in greater range. My point is simply this - WRB's are less frequent on constant volume charts with a similar number of bars to a constant time chart. This is true regardless of 'time frame'. (e.g. comparing daily to N hundred thousand constant volume charts) They also 'mean' something different (obviously). One means that a candle has gone 'a long way' in a fixed period of time. The other means that price has gone a 'long way' on a fixed number of contracts. Do you still use constant vol btw?

Gotcha BF. Currently just using the 15 min chart setup. That's it, fairly simple. Sometimes it's a matter of KISS.

	Quote:
	Anyway leaving constant volume charts aside I'm Interested that you believe lower time frame charts have less clear signals. I know you are using 15 minute ES charts I wonder if you consider there is a 'cut off point' where its all noise? 10 minutes seem pretty safe to me and 5 minutes are OK except when volatility is real low (and you probably want to be sidelined anyway). Mind you if volatility is high 3 minutes seem to get by. Just wondered what your thoughts are? Cheers.

Cutoffs for using candlestick patterns is a toss up b/c as I mentioned earlier, the smaller the timeframe, the need for some sort of additional confirmation is stronger. So, one could trade on the 1 minute chart using candlesticks AND XYZ. In that instance, the 1 minute is just fine. Now if primarily using candlestick analysis for your decision making, a longer timeframe is good. I happen to like the 15 minute chart (currently). I will watch other timeframes for comparisons but the 15 is providing some nice signals with good risk/reward potential.