candle sticks & stochastics

Discussion in 'Trading' started by stravens, Mar 19, 2002.

  1. stravens


    any good feed back on using this combo for entry points and exits
    onstocks, use a 1,3,5 min chart? with MACD? I am looking for different opinions on using candle stick charting with stochastics
    and what considerations I should be loking at.. for entry and exit points thanxxxx.......:confused: :confused: :confused:
  2. DblArrow


    Preface this with - I trade commodities..everthing is done soley off of charts; no news etc.

    I use MACD and divergences between them and price. On 1,2,3 and 5; use the 1, 2 for entry and 3, 5 to keep me in for the longer moves.

    I do not use candlesticks, prefer the cleanliness of bars.
  3. My kind'uv question :cool:

    Hopefully, others that use Japanese Candlesticks profitably or not...will speak up and share their thoughts on this subject.

    My entire trading system is based on Japanese Candlesticks.

    I too use stochastics (6,5,3) along with PO or PPO (percentage price oscillator...similar to the MACD) to confirm what the stochastics are saying.

    I look for "repetitive" pattern setups like the Bullish & Bearish Divergence between stochastics and price.

    Note: I mainly trade the eminis, QQQ and on occassion the big futures.

    My favorite intraday charts (side by side) are 1min, 3min, 10min and daily chart.

    I use daily chart candlestick analysis to help me prepare for my intraday setups.

    I highly recommend not using Japanese Candlestick analysis on illiquid financial instruments. For example...take a look at today's 1-3 min interval chart of PANL, STEM in comparison to NQ02M, QQQ.

    If you like to trade financial instruments without clear Japanese Candlesticks...increase your interval until JC becomes clear.

    Thus, you want charts with very clear Japanese Candlesticks.

    Avoid the intraday DEAD ZONE when using Japanese Candlesticks unless there are strong parabolic trends occurring...up or down during that intraday time slot.

    Also, I always let the candlestick interval complete itself to confirm the candlestick line or pattern before price entry...same with price exit unless it is moving too fast (losing profits).

    In addition, I only enter a position if the candlestick closes at least 1/2 way into the previous candlestick body.

    Thus, for example...I tend to ignore a Bullish Harami that closes in the lower 1/2 of the previous candlestick body while prefering a Bullish Harami that closes in the upper 1/2 of the previous candlestick body.

    Same with Bearish Harami, Tweezer Bottoms and Tweezer Tops and many other JC patterns.

    Further, I prefer exhaustion and reversal candlesticks instead of continuation candlesticks. The latter simply means you've missed the entry and trade position should be ignored unless you like chasing prices.

    My stops tend to be at the high of the entry candlestick for a Short position and at the low of the entry candlestick for a Long position.

    No matter what you prefer...know your financial instruments well while using Japanese Candlesticks.

    Thus, don't be jumping from stock to stock while using Japanese Candlesticks...if you do...your trading will be difficult, stressful and may not be profitable.

    For example, a good friend makes his living off of solely only trading BRCM via intraday candlesticks...he takes 3 to 5 positions per day. Thus, he knows BRCM "pattern tendencies" which allows him to react when opportunities display themselves.

    Nihaba Ashi