Trading Hammers (revisited)
- Thread starter NihabaAshi
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Hi,
Let's be back to hammer, please tell me if Im correct (S&P500)
The first one at the bottom could be a reversal Bullish WhiteHammer, the second one a bullish continuation White hammer.
Could you please add some coments (hidden things I should look before I put my trade on.
thanks and sorry for the thread pollution.
Let's be back to hammer, please tell me if Im correct (S&P500)
The first one at the bottom could be a reversal Bullish WhiteHammer, the second one a bullish continuation White hammer.
Could you please add some coments (hidden things I should look before I put my trade on.
thanks and sorry for the thread pollution.
There's a difference between candlestick charting versus candlestick patterns. Most traders using candlestick charts are not trading candlestick patterns for those that's reading this that may misunderstand the difference.
My answer to your question is to keep reading and participating in this thread because I still think this thread is the most informative about Trading Hammer patterns you'll find in comparison to any other forum discussion, seminar or study course. Further, some of the stuff discussed in this thread can easily be applied to other candlestick patterns.
As to your comments that candlestick patterns can give a high probability trade. Lets put it this way, candlestick patterns all by themselves are not reliable. Most sources out there do not discuss trade management after entry and the few that do it's usually inadequate or very generic (not applicable to current market conditions). My point is that to call something a high probability trade you're talking about from entry to exit and you're talking about understanding the price action your trading prior to the appearance of any trade signals.
The point of this thread is to remove the myths and talk about how to increase reliability (e.g. support/resistance zones or levels, volatility analysis, proper trade management et cetera). That's just part of the puzzle...there's other stuff not discussed in this thread that arguably have more impact on one's performance in trading Japanese Candlesticks or anything else such as market experience, discipline, proper capitalization, money management et cetera.
Yet, there are some candlestick patterns or sub-groups (as stated earlier in this thread) that are more reliable in comparison to other candlestick patterns. That's why I selected Hammer patterns from the long shadow family.
Yes and both the reversal pattern and continuation pattern bounced off key changes in supply/demand price areas. As to a trade, you've already missed the boat in reference to those particular trade signals. Most recently, the bullish white hammer pattern (continuation) that occurred on Feb 25th Thursday. The entry into that pattern was anywhere within the range of the shadow on Feb 26th Friday.
Anything after that is just "chasing". Thus, if you feel the need to chase...reduce your position size to better manage the increased risk exposure because you missed the entry signal.
Mark
RE: the most recently attached chart of white hammer.
I see the WRBodies (white) you have labeled as "key change in supply/demand"
what about all the red WR bodies on the chart, they have no labels and many seem very similar to the white WRBs (only a different direction)?
do you have some place where you have definitions for:
"key change in supply/demand"
and what are minimum requirements for a WRbody bars to earn "volatility spike" labels.
I see the WRBodies (white) you have labeled as "key change in supply/demand"
what about all the red WR bodies on the chart, they have no labels and many seem very similar to the white WRBs (only a different direction)?
do you have some place where you have definitions for:
"key change in supply/demand"
and what are minimum requirements for a WRbody bars to earn "volatility spike" labels.
Yeah, it's been discussed elsewhere here at ET via my prior alias NihabaAshi. I discussed the specifics of my use of volatility in a thread started by someone about volatility analysis. The same for my use of contracting / expansion analysis in a thread by someone about contracting/expansion intervals and the same about the importance of key market events in a thread started by someone else.
Here's a brief summary of the above three together:
* I'm not interested in anything (WRBs or Long shadows) where the price action afterwards traversed (retraced) through it. Thus, the stuff you see highlighted as green is still open for use (no hindsight analysis) for tomorrow's price action until price action traverses through it. I'll try to be consistent in using grey highlight to show a key price area that's been closed.
* The key intervals that represent the key change in supply/demand were all volatility breakout of the contracting price action before it. You should also notice the contracting volatility occurred after another volatility spike. Simply, if its a WRB but not a breakout of contracting volatility...I'm not interested in it.
Expansion --> Contraction --> Expansion
* I'm interested in volatility breakout intervals associated with a key market event or occurring within the range of a prior key market event. Using a decent economic calendar is very helpful and a breaking news source that doesn't ignore global economic events.
The rest is just sit back and wait to see if any Hammer patterns or any other trade signals occurs within those price areas of key changes in supply/demand. Also, the chart was prompt via a specific question by Soweeak about two specific hammer patterns. Thus, if there were other open key areas for use...I would not have shown them on the chart because they had nothing to do with his question.
Note: There were not any other open areas still usable other than the ones I showed.
Simply...key areas shown are s/r zones that represent key changes in supply/demand (green highlights) still open for use until the price action traverses through the key area.
Mark
Hey Mark,
How have you been. it's been a while
Just wanted to thank you again for this thread. My vote for the best thread on ET.
It shows and tells traders that there's more to candles than just the bodies themselves.
The books I've read on candles only cover candle bodies and of course the book cherry picks charts where those candles worked perfectly.
The most important thing i've learned is how to decipher price action leading up to certain sup/res levels as opposed to just looking for a candle to emerge.
How have you been. it's been a while
Just wanted to thank you again for this thread. My vote for the best thread on ET.
It shows and tells traders that there's more to candles than just the bodies themselves.
The books I've read on candles only cover candle bodies and of course the book cherry picks charts where those candles worked perfectly.
The most important thing i've learned is how to decipher price action leading up to certain sup/res levels as opposed to just looking for a candle to emerge.
Thanks. Yeah, I've posted a few Hammer patterns in this thread that didn't work and so did others. Will try to get more into failed hammer patterns and what clues may have been there to use market experience of the price action leading up to the hammer pattern to tell us to ignore this particular trade signal or lower the position size to better manage the increased risk of a valid hammer pattern trade signal.
Mark
Hi Mark,
I have to say I am very excited about learning your way of trading. I began reading this thread from the start I am at now page 47/145 so there are probably tons of information ahead but I couldnt resist myself posting.
Contrary to your style I am kind of code guy. So I coded one of the 3 patterns that you are talking about in this thread. "Bullish white hammer". Of course I programmed it to the rules upto page 47.
So lets assume White hammer is c1 and prior candles are c2,c3,c4.
Here is the list of rules I programmed:
1-) C[c1] > O[c1] [initial condition of being `white` hammer]
2-) US[c1] < B[c1] < LS[c1]
-check following rules for prior y candles.
If there is no `dark` WRB inside prior 3 candles y=3
If there is a `dark` WRB among these 3 candles include prior 3 candles of that dark WRB in to this checklist. This will increase y at least 1.[case c2=dark WRB]. Think x is a loop variable over y candles.
3-)LS[x] < LS[c1]
4-)L[x] > L[c1]
5-)B[x] < LS[c1] except if x is a `dark` WRB
I hope I got it right.
-In my charts Aqua diamonds in the middle of bodies show that candle is a WRB.
-white dots represents PT1 in that chart timeframe.
- big up arrows show that is a recognized bullish white hammer pattern.
-Blue rectangle represents the range of the recognized pattern.
Some of them work nicely some of them not. I will post some which fail and some which is ok. Pls comment if I am missing something. Thanks again for this great knowledge.
Akif,
P.S. Looks like i can only attach one chart. So I will post one for each one.
I have to say I am very excited about learning your way of trading. I began reading this thread from the start I am at now page 47/145 so there are probably tons of information ahead but I couldnt resist myself posting.
Contrary to your style I am kind of code guy. So I coded one of the 3 patterns that you are talking about in this thread. "Bullish white hammer". Of course I programmed it to the rules upto page 47.
So lets assume White hammer is c1 and prior candles are c2,c3,c4.
Here is the list of rules I programmed:
1-) C[c1] > O[c1] [initial condition of being `white` hammer]
2-) US[c1] < B[c1] < LS[c1]
-check following rules for prior y candles.
If there is no `dark` WRB inside prior 3 candles y=3
If there is a `dark` WRB among these 3 candles include prior 3 candles of that dark WRB in to this checklist. This will increase y at least 1.[case c2=dark WRB]. Think x is a loop variable over y candles.
3-)LS[x] < LS[c1]
4-)L[x] > L[c1]
5-)B[x] < LS[c1] except if x is a `dark` WRB
I hope I got it right.
-In my charts Aqua diamonds in the middle of bodies show that candle is a WRB.
-white dots represents PT1 in that chart timeframe.
- big up arrows show that is a recognized bullish white hammer pattern.
-Blue rectangle represents the range of the recognized pattern.
Some of them work nicely some of them not. I will post some which fail and some which is ok. Pls comment if I am missing something. Thanks again for this great knowledge.
Akif,
P.S. Looks like i can only attach one chart. So I will post one for each one.
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