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drsushi

Trading with PA "No Indicators"

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So you've been counting?

 

Yes, I've been counting, ever since I found his name continually mentioned by the same person. He's a vendor, and anytime someone on a forum goes on and on about a vendor, with half their posts being about the vendor, offering very little other real content except to get the name in a post, it raises a red flag for me. Sorry for being paranoid, but many vendors will operate this way. If you were to share more of what you learned from him, instead of just posting his name, it would be less suspicious to me. But you don't care what I think I'm sure, I'm just expressing my concern for anyone else who is reading.

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Yes, I've been counting, ever since I found his name continually mentioned by the same person. He's a vendor, and anytime someone on a forum goes on and on about a vendor, with half their posts being about the vendor, offering very little other real content except to get the name in a post, it raises a red flag for me. Sorry for being paranoid, but many vendors will operate this way. If you were to share more of what you learned from him, instead of just posting his name, it would be less suspicious to me. But you don't care what I think I'm sure, I'm just expressing my concern for anyone else who is reading.

 

Point taken. I just get a little excited because he has helped me so much. My future posts will be more substantive. I do not mean to seem like I am promoting anyone...Nial is just the main person / site I learned from so I tend to quote and talk about him a lot. I see what you are saying though. Thanks.

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Would you be willing to post the code? I'd be very interested. There is a coding forum here:

 

Coding Forum - Traders Laboratory Forums

 

Well, I've put a lot of work into this system now. And with the market falling right now like it is. I'm making BANK. You can download the indicator and my pre-define workspaces/templates and a bunch of "how to trade zones" videos at apazones.com

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Without 'context' I'd bet it's about 50/50. Of course you could easily make that 30/70 or 70/30 by adjusting stops and targets (R:R).

 

There are many more variables than a simple entry pattern that determine 'win rate'.

 

Thanks. In the meantime I did a lot of backtests and found out that candlesticks are a total waste of time.

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That must have been some impressive testing to make such a definitive conclusion. :) And yet, clearly other people trade profitably using candlesticks, weird eh? If you have a search brownsfan posted daily to a thread where traders posted results of real trades. He posted pretty much daily and was profitable week in week out trading.....candlesticks. I guess that will be of little interest if you have determined they are 'waste of time'. Good luck finding something that is not.

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Lol. Every method is a waste of time if you don't know how to use it properly right? I think you could devise automated strategies to be profitable off candlesticks alone, but without market context, money management/position sizing and probably market diversification are likely to be key to its success. With trade selection using experience and context, I think you can greatly increase the odds of the strategy.

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Check out Gregory Morris Book "Candlestick Charting Explained"

 

Morris did a statistical study of candlestick patterns that may help those interested in using

candles.

 

Best Regards

Steve

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Yeah, without market context...don't bother learning, applying nor testing Japanese Candlestick patterns. It's a wast of time & energy unless your intentions is to show that Japanese Candlestick patterns don't work.

 

In contrast, using them with market context, Japanese Candlestick patterns are profitable. Next, throw in some trade experience, money management, position size management and many other important variables of a trading plan...Japanese Candlestick patterns are an excellent trade method.

 

However, I do not recommend trying to go the automated candlestick pattern trading route. They were not designed to be used as such and you'll limit your ability to properly learn how to trade them.

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However, I do not recommend trying to go the automated candlestick pattern trading route. They were not designed to be used as such and you'll limit your ability to properly learn how to trade them.

 

I think this one requires further explanation wrb. My view is if you don't understand it, don't automate it. But if you do understand how to use candlesticks, what specific reason makes them poorly suited to being used in an automated system? They are just data points. OHLC. I'm sure context can be modelled to some extent and certainly money management factored in. Maybe it just depends on the type of strategy you are trying to automate.

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Really good pin bar on the daily GBPUSD chart below, I'm in this trade, very obvious easy price action setup...

 

 

 

You also could have entered a long at the indicated point where a bear candle gets taken out by the next bar. The appropriate place for a stoploss would be a few ticks under the bear candle.This technique can easily be used on new pivot highs/lows knowing that a (new) move up/down will show (at least) a second move up/down after the correction.

 

(I usually switch to a 4 times lower TF for sharper entries and smaller potential losses.)

 

The lenght of this second move has a high probability of being at least 100% of the preceding one (for Elliotticians: a.k.a. a Wave 3).

 

 

Cheers,

 

Peter

5aa710b1ce8e1_BreakoutTechnique.jpg.b19c6206d5410749fc18997eaf20f949.jpg

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Why all the fuzz? One day a acquaintance of mine, who is not into trading, came into my office and looked at my charts. Then he cocky said, pointing at all the ups-n-downs: "Why don't you just sell when it is going down and buy when it's going up?". So that's what I am doing now. Works great. :o

 

Laurus

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Why all the fuzz? One day a acquaintance of mine, who is not into trading, came into my office and looked at my charts. Then he cocky said, pointing at all the ups-n-downs: "Why don't you just sell when it is going down and buy when it's going up?". So that's what I am doing now. Works great. :o

 

Laurus

 

how true.

most people fail because they over analyze.

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Thanks. In the meantime I did a lot of backtests and found out that candlesticks are a total waste of time.

 

lol gianno, candlesticks are a waste of time. Im glad the market takes money from guys like gianno.

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I think this one requires further explanation wrb. My view is if you don't understand it, don't automate it. But if you do understand how to use candlesticks, what specific reason makes them poorly suited to being used in an automated system? They are just data points. OHLC. I'm sure context can be modelled to some extent and certainly money management factored in. Maybe it just depends on the type of strategy you are trying to automate.

 

I strongly agree that if someone doesn't understand Japanese Candlestick patterns or any other pattern...don't bother trying to automate it as if the automation process will enable that understanding. Unfortunately, too many traders that automated or coded Japanese Candlestick patterns have a lack of understanding about the patterns but are great programmers.

 

The reason why Japanese Candlestick patterns are poorly suited for automation is because it's very dependent upon "market context" and that market context can not be automated nor coded. Simply, at best, coded Japanese Candlestick patterns is only good for identification purposes and not good for trading purposes as an automation system.

 

Further, I've never met a profitable Japanese Candlestick trader that's via automation but I have met profitable discretionary Japanese Candlestick traders that are greatly dependent upon "market context" as their primary trading tool while using Japanese Candlestick patterns as a confirmation method to that "market context".

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I did not invent this and I am not affiliated with any provider or trainer. I have done my homework for years and continue to do so…what I am about to explain was best described to me by Lance Beggs..If it seems I’m starting out simple, that’s because PA is simple. Remember from tiny acorns come mighty oak trees.

 

Here is an example of an up bar

 

attachment.php?attachmentid=26598&stc=1&d=1320373348

 

And here is an example of a down bar

 

attachment.php?attachmentid=26599&stc=1&d=1320373348

 

The difference is obvious, it depends on where the close is with respect to where the open is. If the close is above the open you get an up bar. If the close is below the open, you get a down bar.

 

If the close equals the open you get what is called a doji.

 

attachment.php?attachmentid=26597&stc=1&d=1320373348

 

What If you had to place a trade based on only 1 bar?

 

Does it make sense to determine the direction of the market and trade with the trend of that given bar?

 

Thus what is the direction of the market given the following bar?

 

attachment.php?attachmentid=26592&stc=1&d=1320373348

 

Well it’s easy to see the close is below the open, so the market movement is down…

 

So what if you only saw the following bar…

 

attachment.php?attachmentid=26593&stc=1&d=1320373348

 

 

Well we see that the close is above the open, so it would seem to make sense the direction is upward.

 

This is the basis of reading Price Action. Oh there’s more, don’t worry…

 

What if both of these bars were consecutive (and they were as I took them from one of my charts)

 

attachment.php?attachmentid=26594&stc=1&d=1320373348

 

What do you see given these two bars…

 

Well the first bar ended down, but the second bar ended up. Did you notice there is an embedded gap up from the close of the first bar to the open of the second bar? So in this orientation the movement is more than just up, it’s really up, up with a purpose if you will…

 

Given just this small bit of information, you have read/observed upward market sentiment….and a body in motion stays in motion until acted upon...

 

Reading Price action is about paying attention to the tiniest of details and THINKING about why price moved like it did….

 

This is the edge that changes a setup from just a another setup to a higher probability, lower risk setup.

 

You can also apply what is called “Bar math”

 

 

attachment.php?attachmentid=26595&stc=1&d=1320373348

 

 

 

Notice that the combination of the 2, 1-minute bars creates the single 2-minute bar…

 

Can you see how the Red and Green areas combine to create the single bar? It’s logical.

 

Thus far my examples have been created with only complete “fixed” time bars. Keeping it simple, consider that during the creation of the first 1 minute bar, say for example purposes within the first 10 seconds of the creation of this bar it looked like the complete 1-minute bar.

 

attachment.php?attachmentid=26592&stc=1&d=1320373348

 

 

For 50 seconds price stalled in this orientation… Furthermore, assume that the 2nd bar sat at this orientation for another 50 seconds.

 

attachment.php?attachmentid=26601&stc=1&d=1320375779

 

Lets also assume this was during regular trading hours within the first hour of the day, so trades are taking place at these values, it’s just that price has stalled…

 

 

And then in the last 10 seconds of the creation of the 2nd bar, we end up with the final orientation

 

For this 2 minute period , for 100 seconds (the last 50 seconds on the first bar and the first 50 seconds on the last bar) price was at or below this High=Low=Close=Open value and pretty much stalled…

 

Then in the last 10 seconds it "popped" up

 

attachment.php?attachmentid=26595&stc=1&d=1320373348

 

Does this seem to provide a little more information you can use as an edge? Do you get a feel for what this would look like in real time?

 

Here’s your home work….

 

What if you were given this as a 5 minute bar?

 

attachment.php?attachmentid=26593&stc=1&d=1320373348

 

What possible 1 minute bars could add up to create this 5 minute bar?

 

What would the formation of the 5 minute bar look like given one of these orientations?

 

To me this is the basic aspect of Price Action…

 

One needs to get to a point where the trading action you take comes just as natural as the action you take when you see a Traffic light change from Yellow to Red or from Red to Green given various driving conditions. Your trading sense needs to become intuitive; you must train your brain to see and react…after a few thousand hours of watching you get the hang of it…

 

Oh a final note of importance, it's one thing to Read Price Action... and a completely different thing to Trade Price Action....that’s where your personality and style weigh heavily upon your success or failure.

 

happy trading to all...

bar2.png.3678ca0e3f539f4ba8244af95887f0f4.png

bar1.png.21f1f02db93935fc2dcb7cd96f85727c.png

2barstogether.png.bc5fea0989a10e7eff959faafe206679.png

barmath.png.3c918bf04afd00789aeb84e91abd417a.png

barmath2.png.58606914b89fc8c5d08e8eb29d689392.png

doji.png.bab02955e84c6d68741e2f0f92eaf584.png

upbar.png.a8c2a932d9a8fc9fde5a26b63276b6d9.png

downbar.png.f62bbe011538481830147740f0567201.png

min50.png.dc101cba06efede23a3d7f467fe93c0c.png

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tulanch,

 

Monitoring price action within a defined period like 1 min is not really going to be especially effective. Indeed as you noted, the price action you are looking for might have happened in many different ways during various different 1 min periods. Personally, I don't believe fixed time candles are appropriate at all in watching price action. I prefer to see the actual amount of trading activity. So, I prefer to watch the dom and use volume based charts. The time based charts I do use are to look for swing extremities, not price action. In fairness, it doesn't really make any difference what you look at and how you interpret it if you are a profitable trader. If you do it and it works, it ain't wrong. :)

 

wrb,

 

I think that context probably can be modelled nowadays by very smart people with very high powered computing. But then those guys probably don't use candlesticks either! :o

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I've looked at things with volume bars, range bars (both true and ninja format types), tick charts, etc...

I just do not like how non-time based charts can generate x number of bars in the blink of an eye.

 

With that said, I do not base my approach on any specific time... rather I have found a timeframe for the time of day and the market I trade, which I am comfortable with. I’m a scalper and have yet to learn how to hold over 10-15 minutes. I’m more than happy to take what the market offers by readying what it’s doing. I see the chart as a “map” of where it has been. When the market "gets lost" I think it back tracks, pulling back to prior high/lows. So I keep an eye out for when it gets lost and simply follow the map along with it. I like the Matrix Movie – “I look for when something is wrong in the matrix”. I find watching how price reacts at these locations as a key component of my approach.

 

It does not need to be represented as candles; it could be just numbers, which at the end of the day is really all the market is. I personally find candles make it quick and easy to confidently summarize/read/observe the complex inputs that have brought the market to where it is at any given moment.

 

There is no doubt that the market is driven by computers, specifically those that are but milliseconds away from the main servers in Chicago and New York. But they still leave bread crumbs to follow/consume. I keep telling myself I am one of those little fish that follows sharks, making a meal out of the scraps left behind. My goal is to not become the food.

 

Yea candles may be the hype of days gone by, but they work for me. Confidence in one’s trading plan is crucial and need not be validated by anyone but yourself. If it looks like it, it is and close is close enough. Confidence leads to consistency which is the key to success in this business.

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I strongly agree that if someone doesn't understand Japanese Candlestick patterns or any other pattern...don't bother trying to automate it as if the automation process will enable that understanding. Unfortunately, too many traders that automated or coded Japanese Candlestick patterns have a lack of understanding about the patterns but are great programmers.

 

The reason why Japanese Candlestick patterns are poorly suited for automation is because it's very dependent upon "market context" and that market context can not be automated nor coded. Simply, at best, coded Japanese Candlestick patterns is only good for identification purposes and not good for trading purposes as an automation system.

 

Further, I've never met a profitable Japanese Candlestick trader that's via automation but I have met profitable discretionary Japanese Candlestick traders that are greatly dependent upon "market context" as their primary trading tool while using Japanese Candlestick patterns as a confirmation method to that "market context".

 

I would agree totally with this point. I am a PA trader who relies upon market context and candlestick patterns. I don't see how anyone could attempt to automate candlestick trading, or really trading at all, so much of trading depends upon your ability to read and trade underlying market sentiment, it seems nearly impossible to successfully mechanize the ability to do this properly...

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Why all the fuzz? One day a acquaintance of mine, who is not into trading, came into my office and looked at my charts. Then he cocky said, pointing at all the ups-n-downs: "Why don't you just sell when it is going down and buy when it's going up?". So that's what I am doing now. Works great. :o

 

Laurus

 

Hi Laurus

I love your idea...........

What market?

What time period?

Your acquaintance saw your chart. Did he see the bar forming?

kind regards

bobc

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