OK, but once the bullish hammer pattern has closed, and the price of next candle is now trading below the close of the hammer.... Is there anything that tells you to enter now vs. to wait for a few more ticks down? Or it's completely intution?
This question is about WRBs as profit targets. As I understand the WRB profit targets develop in real-time after the entry. The pt1 always develops on the same timeframe as the pattern signal. Other profit targets may be developed on smaller or higher timeframes depending on whether you feel "greedy" or whatever. Correct? Now... To understand the development of a WRB profit target in real time. Suppose you're long after a white hammer pattern. The price is going up and producing a white candle. As the candle develops in real-time, there comes a moment where it becomes a WRB - ie. its body is greater than the bodies of 3 previous candles. You take pt1 profit at that very moment. You don't wait for this candle to close. Correct? Because if you wait for it to close it might no longer be a WRB. Then you switch to a lower or higher timeframe and proceed in similar fashion. Correct?
Yes, yes... dacharts.com like Nihaba mentioned in his last post also! You would of thought I would of discovered this by now. I do email some charts but didn't realize I could send them to dacharts at the same time... I will have to figure out how to do it real soon. Thanks for the tip...
It's completely subjective/intuition. However, hopefully someday I can define (rules) this particular area in the trade management that concerns the better entry price. Yet, I'm in no rush to do such because I rarely miss getting my desire entry price or I'm completely satisfied with where I've entered at in relationship to the pattern signal closing price. NihabaAshi
Hi Nihaba, Hope you are having a great time visiting with your relatives. There is nothing like getting away from it all for awhile... I understand about the subjectivity as to when to enter after a hammer line has been confirmed. This is true for me also. If I really like the setup I will go in pretty quick. If not as enthusiastic, then I will take a smaller position or sometimes even scale in trying to get a better price average. For this I look at the 1-min price action. I agree that you don't need a lot of trading instruments on your plate at the same time. It makes it hard (at least for me) to watch and understand the price action if looking at too many at once. And your final comment about Long Shadows being a signal and to quickly look for oppurtunities in other intervals and sister trading instruments is very important.
Yes but my prior trades of the day have an impact on this decision. For example...although I don't have daily profit goals... If I'm happy with my profits or happy with the way I've been following my trading plan for the trading day... Then I get a trade that's doing well and has reached its pt1... I'll get greedy and try to ride the trade by increasing the chart interval in an attempt to catch a bigger pt2 WRB, pt3 WRB and so on. The opposite is true also...if my trades for the day have rarely been reaching a pt2 WRB after increasing that chart interval... I'll get to the point where I make a decision to stop increasing the chart intervals for those WRBs and just either use the pattern signal interval for all pt WRBs or use a lower chart interval to take WRBs that are faster in their development. I highly recommend to someone that's new to WRB analysis to take pt1 WRB as soon as it becomes a WRB... At that very moment of a pt1 WRB eventhough the interval has not completed itself. Can that pt1 WRB be automated ??? Yes...I know a few that does use such and for all their pt WRBs. However, I have not asked them for any details about their automation of WRB exits eventhough they learned about WRB analysis from me. Thus, I don't use any WRB automation exit system and can quickly do the math in my head for the WRB number that's > the average number of the prior three bodies... I do this in my head as each interval completes until a WRB forms. I then repeat the process for the next WRB if I'm still in trade with some remainders. Once again, as stated above...someone new to WRB analysis should not get greedy when a pt1 WRB develops... They must exit at that pt1 WRB. Then...as more experience, intuition and success develops over the years... Depending upon how one has been doing for the trading day in their trades prior to that trade, depending upon if its range day or trend day... You'll know when to get greedy or not via increasing your chart interval or staying in the trade after a WRB forms. This is a good example of how some discretionary traders can be using strict rules for a valid pattern signal... Yet, can decide for the trade management after the pattern signal... To either continue using strict rules, automation, intuition or a little of everything in this particular area. However, regardless to the trade management decision... There still needs to be a trading plan. Without a trading plan...it becomes extremely difficult or impossible to exploit a valid Hammer pattern signal that has strict rules (no subjectivity nor intuition). The above is true for any strategy regardless if its a price action only strategy or a strategy involving indicators. Hmmm...I think we just went from a 300 level course to a 400 level course over that last few pages... Will need to slow it down or else I'll scare away all the candlestick traders. NihabaAshi
Yes...having a good time. Their sleeping in late this morning and I'm using the quietness and freedom to catch up on a lot of emails, replies, market documentation of yesterday's price action and other work. NihabaAshi
NA, once you take some off at pt1, you move stop on rest to BE, right? But once you take some off at pt2, do you move the stop to pt1 on remainder or keep it at BE?
I've gone as far into the trade management after the entry signal then I wanted to. My exit method is slightly different when I trade size in comparison when I trade only one contract. Beyond the above...I will not discuss in-depth info about my initial stop/loss protection method, trailing stop method nor any contingency plans because such is not specific to Hammer patterns (a secondary method for me). Your questions deals with the trade management of my primary method and such is something I will not discuss in this thread. However, is I mentioned or hinted in my early posts in the prior few days... The results of my first few trades of the day will have a direct impact on the trade managment of my trades the remainder of the trading day depending upon if I'm happy with my profits and/or execution of the trading plan. Just remember a few rules... * If profitable for the day...don't let winners become losers (nothing less than breakeven). * If not profitable for the day...don't let winners become breakeven trades (trailing stop must be at a profit if hit). Simply, my trade management is not a hat that fits all sizes. Thus, the results of the trading day going into a particular trade will often determine for me how I manage that particular trade after entry. As usual when it comes to the trade management...what works for me may not work for someone else depending upon their trading instrument, trading style or pattern signal. NihabaAshi