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One problem I continually run into is the entry. If I exit on the close of the hammer, it seems that it doesn't work 
When I enter during the middle of the confirmation candle after the highs have been cleared, I seem to find myself in a trap that gets taken out rather quickly. But if I wait for the close of the confirmation candle to enter, then it seems as if the move is already done since those are always the big moves. Obviously I need more experience on when to enter, but I think if we could bounce some ideas around that would really help. |
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James,
As illustrated
here, there are 3 possible entries if you play the hammer. Basically, once a hammer is formed and confirmed by whatever you use, you have to act. Waiting for the close of the NEXT candle, esp on a daily is just waiting too long in my opinion. Sooner or later, action must be taken when you see the hammer.
Once a confirmed hammer is seen, the entries can be:
1) Buy @ market next day
2) Buy if price the following day is somewhere in the body of the hammer (you are trying to get a 'better' price)
3) Buy
as soon as price clears the high of the hammer
I realize there's other ways to enter, such as waiting for a candle after the hammer to confirm your bullish movement. Problem is, as you've seen James, how long do you wait? At some point, you are no longer playing a hammer. If you get a large bullish WRB the next candle, now you are playing an engulfing candle or some other pattern. The hammer pattern by itself requires action to be taken the following day.