[brutusdog]

Originally Posted by brownsfan019 »

I was looking as well BB:

what about the bar 3 bars prior to the down arrow you marked.....a valid short entry?

[daedalus]

This is a great thread guys. Its much appreciated! Please keep it coming. I've been lurking in this thread for a couple weeks and even though I don't post I just want you to know the content is appreciated!

Guys have any tips on initial stop placements? Management?

[brownsfan019]

Originally Posted by daedalus »

Guys have any tips on initial stop placements? Management?

IMO this makes or breaks this (or any system).

Stop placements:

1) Classic candlestick analysis would say one tick above the high or below the low of the entry candle.

2) Use previous support/resistance.

3) Fixed number.

Money Management (too many to think of at once):

1) Trade all day or after a profit target hit (which could be reached in one trade)?

2) How many losers in a row can you take before realizing it just ain't happening today?

3) Do you trade pre-market, if so, when? If not, why not?

4) If the first pattern fails, can you re-enter in the same area even if it's not a new pullback pattern? IE, you get a nice inv hammer to go short that fails. 2 candles later is another inv hammer... can you take it? Or do you need to wait for the full setup (move down, test back up to EMA, inv hammer)?

A few ideas there.

That's the reason why I say this part of the trading plan is more important than the entry method. I think this thread has shown there is potential here but it's also easy to see how it might not work depending on the money mgmt portion.

[Bearbull]

It is not a question of "IF THIS SETUP OR ANY OTHER WILL WORK", it is whether or not after having carried out the required research , testing, establishing entry/exit rules, that the trader sets about acquiring the skill, discipline, patience etc TO MAKE IT WORK

Brutusdog pointed out the inverted hammer 3 bars back, yes that is a valid setup, this time the trade is stopped out, then we have another immediate setup, again this is a valid setup, now as BF points out, is the trader still wringing his hands, moaning, banging his head against the desk, kicking the wife or the dog whichever happens to be in the vicinity over the loss on the last trade or has trained himself after having proved to him/herself the consistency in profitability of that particular setup over time, to be mentally prepared and available for the next trade.

As to the placement of stops, again this is getting into tactics as BF stated, there are just so many variations, the logical stop is normally over the previous swing high or low, but for some this could be too wide.

[brutusdog]

Originally Posted by Bearbull »

It is not a question of "IF THIS SETUP OR ANY OTHER WILL WORK", it is whether or not after having carried out the required research , testing, establishing entry/exit rules, that the trader sets about acquiring the skill, discipline, patience etc TO MAKE IT WORK

Brutusdog pointed out the inverted hammer 3 bars back, yes that is a valid setup, this time the trade is stopped out, then we have another immediate setup, again this is a valid setup, now as BF points out, is the trader still wringing his hands, moaning, banging his head against the desk, kicking the wife or the dog whichever happens to be in the vicinity over the loss on the last trade or has trained himself after having proved to him/herself the consistency in profitability of that particular setup over time, to be mentally prepared and available for the next trade.

As to the placement of stops, again this is getting into tactics as BF stated, there are just so many variations, the logical stop is normally over the previous swing high or low, but for some this could be too wide.

great post bb exactly what i was getting at.

[brownsfan019]

Originally Posted by Bearbull »

It is not a question of "IF THIS SETUP OR ANY OTHER WILL WORK", it is whether or not after having carried out the required research , testing, establishing entry/exit rules, that the trader sets about acquiring the skill, discipline, patience etc TO MAKE IT WORK

Nice post BB. As I've attempted to say here and many other times on TL, the system is only as good as the trader trading it and as good as the research and work they've put into it.

I think there is so much emphasis placed on when to enter a trade when the exits are just as important or more important IMO. The key for any trader is to attempt to maximize the return on your dollars while minimizing any potential losses. Of course, that's easier said than done.

[Bearbull]

Rare - but both setups (i.e hammer on the 1st , on the 2nd, a downbar, insidebars, upbar which when blended together constitute a hammer) in the first couple of hours on Dax,

Both longs have support to the left, plus if one wants to add other tools such as ADX etc , fine, ADX here was over 30. There was even further confirmation from the volume.

So the initial stage is to research the 2 setups first, then later on after gaining some experience in recognizing these in realtime, and evaluating the risk/reward etc, one can then proceed to bring in other additional tools such as support/resistance, trend, oscillators, volume etc, one step at a time.to fine tune the entry/exit

[Bearbull]

To drive home the concept of blending, same setups but on a lower time frame.

Now the 1st setup which was with a hammer exhibits itself as a 3-4bar turn, i.e. downbar with increased range, insidebars, followed by a up reversal bar on increased range.
So the 2 setups which were mentioned to experiment with are effectively 2 sides of the same coin, depending on the timeframe.