[Anonymous]

Things to consider:

* The low of the white hammer line is at an even number. It is best not to place your stop at an even number. The low of where price traded in the logical stop area, is also an even number. Hence a fixed stop (not the recommend type of stop) would want to be on an odd number and certainly placed like 1, 3 or 5 pips away. Note that an even number minus an odd will give you an odd number.

* In this case the low was at around xxxx4 (example). Now we also would not want to place our stop at a round number-number ending in zero. More reason that our stop should be LOWER than the "logical stop area".

* Market stops are better than fixed money management stops. Problems arise, however, when market based stops are further away than one's account size can tolerate. Note this is a personal problem and shows why trading can be so difficult. That is, the correct thing to do does not seem prudent. When in reality, the prudent thing to do is not to be undercapitalized in the first place.

* As you know, this represents a Paradigm shift for me. In this method, three options are considered PRIOR to the trade entry.

1. If wrong, the market will stop out the position.

2. If the market moves against you and creates a CONTINGENCY signal a reversal of position will be undertaken. i.e. Sell twice as much as the original buy to get net short due to the current price action.

3. Price action may determine that the current trade is not optimal, yet a trade to the opposite side (contingency trade) is also not warranted. In this case, wait for the stop to be hit. And this is the one that gets me, because if the current Price Action says the trade is no longer valid, and a trade in the opposite direction is also not valid, why would one want to be in the market at all?

* Volatility has to be taken into account. Would you really place a stop just below the hammer, which is within the "noise range" of the market? Clearly, when they "work" a stop just below the hammer makes sense and is the best. However, it is possible for the random noise of a market to go back down and test that area. Not to mention blatant stop hunting.

* I also have to overcome my desire to let the market take me where it wants to go. That is sitting tight. Mark uses WRBs for profit targets as they represent various supply/demand dynamics. I still like the idea of being right and sitting tight. Not exiting a position with a profit. Just moving my stop until the market takes me out.

* Brownsfan is correct: one must understand the underlying trend. Candle signals tend to fall into the trend reversal or trend continuation camp. They therefore should not be used to counter trend trade nor congestion range trade. The sub-group that I am looking at are either reversal or continuation.