brownsfan019

When I mentioned the fib #'s I was just referring to setting your VBC level @ one of the fib #'s. I don't use actual fib analysis at all, but on elitetrader they have discussed setting the VBC level to an actual fib #. To me, not a big deal or difference.

The one thing you will need to play with Abe is that volume setting. I pulled up a 5000 YM and that is way too slow for me. That means nothing to you, point is to play with some other settings as low as 500. It's not going to hurt anything to have a few different VBC's up if you are going to look at them. 5000 appears to be the 'slow' version. I would also look at 2500, 1000, 750 and 500. Obviously the smaller the #, the quicker the chart will respond. Also, since you are looking at different VBC's, I've also read that some use Fibonacci numbers. I guess I just like round numbers as I didn't see a big difference in a fib number and a round number.

Abe, Glad to see you are watching and paper trading on the VBC. I assume you are still on paper. You better be. So, what are your immediate reactions to the VBC? Just curious to hear what you think of a chart the provides opportunities if you pay attention. I haven't looked at a 5000 on the YM, so not sure how that looks in real-time.

Abe, One observation if I may - today's charts are the 5 min YM chart. I believe we've also seen a 1 minute chart. My suggestion is this - focus on one timeframe for now. I know others will say that having multiple timeframes is good, and while that may be true LATER, I think for now picking one and focusing on that is a good idea. I think there's a big difference between the 1 min and 5 min chart. And I mean HUGE. The reason I suggest this is that you need to start developing a rhythm or feel for the market and jumping different chart timeframes is going to make that harder. Now, one bridge that could help is the volume based chart as I mentioned before. Have you taken a look at one in real-time? Here's why I think it would be wise to at least look at one in real-time - part of the problem with the 5 minute chart in this environment is the volatility. I think that the 5 is going to get you into moves WAY too late (currently). The 1 or 3 minute would be a better idea if you find yourself saying - Good idea, just too late to the party. Now the VBC will take that and provide a visual for you in real-time. I can't stress enough how important it is to watch a VBC in real-time. You'll see what I mean... when action is taking place (and presumably when you WANT to be in) you'll see candles print like crazy. This of course requires discipline and focus. Also, when candles are taking longer to print, you'll know that the volume is slower and either you can pass on those trades or lighten the load perhaps. The VBC can provide quite a few more trades depending on how you are trading. I attached a small snipit from today's ES 5000 VBC. I believe at one point you were looking for 2 bullish candles (blue on my chart) to consider a long. Well, take a look at 11:40am or so. There was a 10 pt move approx with NO red candles at all. NOW, I AM NO WAY CONDONING THIS AS A TRADING PLAN, THIS WAS PURELY FOR ILLUSTRATIVE PURPOSES. Look at that VBC chart. Note that there is less than 1 hour of data there and how many candles are present as well... Again, you gotta pay attention with VBC's, that is the one major 'catch' if you will.

Would you mind explaining your statement here jake? I'm curious as to what analysis you have done that shows a dragonfly/gravestone is stronger than a hammer. I personally don't see how either of those technical types of doji's are stronger than a hammer/shooting star. I would actually take the side of the discussion that hammers/shooting stars are stronger, partly due to that I see hammers/shooting stars much more often in my trading (daytrading of the ES) and I have found entries to be easier to gauge on hammers/shooting stars as well. That's not to say that your statement is incorrect or anything, but I'd like to know why you feel those doji's are stronger than hammers/shooting stars.

Good points guys. The key with all candlestick analysis is the context in which the formation appears. Doji's appearing in a flat market are meaningless to me.

Mark, Thanks for sharing. The post I was referring to has since been deleted by Pivot or a mod. The post I was referencing was VERY specific on how you use candles and I simply said we need to expound further on this or it's of little use since very few here, outside of Pivot and you, understand the analysis.

Great points Tin!! I think VBC's provide that volume confirmation that you like, already in the candles, so that works well for me. The catch being, as you've seen, these things can print VERY quickly if not paying attention. That's the downside, but that's also the upside - when candles are printing like crazy on a VBC, I am able to participate in that action as long as I am paying attention.

James_gsx had a good question on how to interpret a DOJI and I thought we could start a thread discussing different candlestick patterns. We can start a new thread as questions warrant. The DOJI is visually depicted as when the open and close are the same. While there are a number of different kinds of doji's, there are 3 kinds of doji's in my opinion: 1) An even doji - this doji looks like a perfect plus sign + where the open and close are the same and the high and low are an even distance from the open and close as well. Example: 2) A bearish doji - this doji, while having an open and close identical, has a large upper shadow, indicating bulls tried to push the price higher and the bears brought it back down. Example: 3) A bullish doji - this doji, while having an open and close identical, has a large lower shadow, indicating bears tried to push the price lower and the bulls brough it back up. Example: Here's a little doji 'cheat sheet' along with some other kinds of bull/bear doji's: The question then becomes what doji's do you play and how? In other words, do you only play a long on a bullish doji? If so, why? If not, why not? There is no right answer here as it depends on you as a trader and the timeframe being used. As I mentioned previously, the lower the timeframe, the more flexible you need to be in my opinion. Good trading!

Now that we discussed the what these candlestick patterns or formations can look like (click here for that thread), we'll now discuss HOW to use what you've just studied. There are a few schools of thought of how to use candlestick analysis. The most traditional way is to find the end of a trend (aka counter-trend). In other words, candlesticks can visually show the possible end of a trend. In my experience, I have found that candlestick analysis usually will signal the end of a trend; however, a few signals may FAIL before one WORKS. That's part of the game and a risk you have to be willing to accept. The other important consideration here is how you define a trend and then how you define a counter-trend trade. For example, in day-trading the ES, I personally look for "counter-trend" trades, but the "trend" could literally be a small "micro'" trend. In other words, in my day-trading biz, I use the candlesticks to help show the possible end of one of the many, small "micro" trends that appear throughout the day, every day. I think that's what so powerful about candlestick analysis - while the majority of books, websites, etc. are going to talk about counter-trend on a daily chart, I think the candles can help quite a bit intra-day. So in the purest form, candlesticks by themselves are meant to show the possible end of a trend. The other key here is what other indicators, if any, you use to aid you in recognizing a candlestick signal. For example, Tin has mentioned his use of volume in candlestick analysis. And the last consideration for today is whether you use candlestick analysis as the PRIMARY or SECONDARY use in your trading plan. Again, many schools of thought here. I will add this piece of advice after having been 'schooled' by the markets over and over and over again.... I would highly recommend you use something with your candlestick analysis, even if it's as simple as high volume, as Tin has mentioned previously. There's obviously more indicators out there than I could possibly imagine, so perhaps the combo is right in front of you, if you just look hard enough. Good trading!

James - excellent question on use of doji's. I think that's a great question and I will start a thread dedicated to it.

Abe - MrPaul has it. There is no 'right' setting, but I am using a 5000 setting with the ES. And that can be fast, but if you like the 1 minute, perhaps a setting similar on the YM would work. On the YM, I would look at 500 or 1000 and just SEE how it LOOKS. If it looks too fast or slow, adjust from here. IMPORTANT NOTE: You need to place your cursor on each candle to see when these candles printed. In a fast moving market, you could see candles printed in 15 SECONDS! Wow, that's fast! But, that's the point - you want to get into quick moving markets as quickly as possible and not be standing by watching. As MrPaul said, click here for the thread on VBC's.

Take a look this weekend to see if you have VBC's and see if they make a difference for you. It took me years to even hear about them, so if they work for you and saves you some time, great! If not, no harm.

Abe, One idea - for the way you are trading (and I'm not 100% sure what that is), take a look at Volume Based Charts (VBC's) just as a comparison. I see the chart posted is a 1 minute chart, so you are not adverse to some quick moving charts. I am currently running a 5000 VBC on the ES. In case you are not sure what a VBC is, it's when you tell your chart to print a new candle after so many contracts have traded. It can take that volume function that many use and display in candle format. Some charting packages refer to this as a Contract Setting and some chartings do not offer it. But if you have it, it could be worth looking at for comparison purposes if nothing else. Going to a VBC made a big difference for me when I first found them and even though I got away from them, I am back (esp with this volatility). I found minute charts to be taking too long in this current environment. PS Your charts look cleaner and I hope they are even easier for you to make on the fly with SnagIt!!

Perhaps there's something for Abe to consider notouch! When 200 SMA FLAT, pay closer attention to for setups. When SMA trending, better have another plan to make some money! As I said, I've never done much with the 200 outside of daily charts on stocks, but that was awhile back.

Abe, Here's a 5 minute ES chart from today with the 200 SMA. Kind of intriguing how it played out (at least today). Now the questions you need to answer if you want to move forward with this are: 1) Exactly how and when will you enter a trade? 2) How will you determine when to take a profit? As you can see, some of these bounced nicely off the 200 and provided very nice profit potential and not so much later in the day. 3) At what point are you wrong (where your stop would be) and why? 4) Is there a Plan B? In other words, if you get stopped, should that perhaps be a reversal stop since your stop shows that a bounce off the 200 failed? If not, at what point do you consider going short (in today's example), if at all?

Abe - I've never really looked at the 200 SMA before, but it sure looks like you could have simply played the bounces all day long on that thing today. Again, I have NO IDEA if this is a profitable strategy or not in the long run, but you may have stumbled onto a nice, simple play.

I can't begin to tell you how much I use this thing for everything, esp in trading.

Try this - http://www.oldapps.com/download.php?oldappsid=SnagIt725.exe Sorry, thought it provided the exe as well. Here's the link Abe was able to use - http://www.oldapps.com/SnagIT.php

Abe - Check out this thread!!! http://www.traderslaboratory.com/forums/f18/free-snagit-7-a-2170.html#post15814 I found that just for you! Enjoy!

http://www.techsmith.com/snagit/ukdn.asp Here's a free Snag It, version 7 (current is version 8). Enjoy! This is for my buddy Abe who can really use this to make his life easier!

Pivot - what you are discussing is specific to Mark's using of candles and unless he is willing to post every detail on how they are used, I'm having trouble understanding how any reference to that is useful. As we both know, Mark uses candlesticks in his own fashion and it obviously works for him; however w/o specific resources made available to the readers here, esp newbies to candlestick analysis, no one can follow your post.

Most charting packages have something; however my point is that most are clunky and not user friendly. And for a quick chart annotation, Adobe is way overkill where you can hit your printscreen button and SnagIt takes the screenshot and off you go. It's quick and easy. That's it. It's 40 bucks and it does so much that can make documenting trades, etc. much easier. And if 40 bucks for SnagIt is expensive, Adobe is going to be way out of the question.

Depending on the amount of annotations, notes, etc. SnagIt can be a very nice tool to have for 40 bucks. And the uses beyond just trading are impressive with SnagIt.

Nate, For me, it required a leap of faith. I was a stockbroker making good money each month and when I told some people that I was resigning to trade, I can't explain all the variety of things I was told... I had built a strong book of business and was just going to walk away. It's kind of like putting in your time trading, getting successful and then leave. But for me, it was something that I wanted/had to do. I wanted out of corp. America and wanted to own my own biz. I've always loved the markets so being a private trader was a logical step. And of course, this has/is a tough biz to crack into. It took me longer than I thought. I mean, how hard could this be, right? I think you'll read 2 schools of thought on this topic: 1) If you are going to get wet, you mind as well jump into the deep end and see if you can swim. 2) Put your tiny toe in the water and see if it hurts. If so, get out! My belief is that if you are ready (or as ready as you think you will ever be), you jump and don't look back. And I mean jump. You either treat this is a full-time biz or treat it as a part-time hobby. NOTHING will replace 'face time' - time in front of the computer and charts in REAL TIME. It's way to easy to look at past charts and just see all the $$$ you would have made. Now, I am not saying you take your life savings and place some large trades day one. I am saying that a full-time biz requires work before 9am, during RTH, and after 4pm. It means you live and breathe your biz. It means you pay no attention to the naysayers out there. It means you give it your all and don't look back. To me, the absolute worst thing a person can do is always wonder 'what if....' Life is way to short to be wondering what if.