Trading Hammers (revisited)

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Quote from NihabaAshi:

I use Japanese Candlesticks in my trade methodolgy and Hammers (its sub-groups) are one of my favorites.

With that said, candlestick analysis should not be used alone and I prefer to use them as confirmation signals to what I already understand about the price action as a price action only trader (no indicators).

I'm hoping this thread becomes a continuation of a prior Hammer thread called Tradin Hammers.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=18381

However, if you don't believe in the merits of using Hammer patterns or think they don't work...

Instead of just showing up and saying Hammers don't work (admitting you failed at using them when others have not)...

Please post a recent chart of a failed Hammer pattern.

Hopefully I or someone else that uses Hammers can reply with helpful insights if we see something wrong with that particular Hammer pattern in your chart example.

Yet, if your chart is stock chart...I myself will not provide any analysis of such because I do not trade stocks (equities) nor do I have an understanding of its price action mainly because I'm unable to watch its price action in realtime or I don't have any live-recordings of its price action.

However, that doesn't imply someone else cannot reply to your Hammer discussion in relationship to a particular stock (equity).

Simply, one of the keys to using Hammer patterns properly is to understand the price action prior to any trade signals.

Further, if you ask anyone that's participating in this thread about Hammers in general...please post a chart example of a particular pattern in question.

In addition, you can do a keyword search here at ET on any past posts that I've discussed Hammer patterns via typing either NihabaAshi Hammers or NihabaAshi Hammer in the below ET search menu...

http://www.elitetrader.com/vb/search.php?s=

I make it easier for someone to research my past comments on anything via intentionally typing my name at the end of each message post.

Once again...I do not recommend using candlestick analysis all by itself and it should be only used as a confirmation to what you already know or believe is occurring in the the current price action.

Something else, if your going to learn about Hammers or any other type of price action pattern via hindsight charts alone...

This is very difficult and can give some traders a false sense of understanding the price action that leads into the Hammer pattern and possibly sabotaging the ability to react to Hammers in realtime.

Instead...do live-recordings of your trading day that also captures the live action of a Hammer pattern formation and then use your hindsight charts as a reference point to those live-recordings.

I use the software called Camtasia Studio and I believe their product called Snagit also does live-recordings.

http://www.techsmith.com

It's an excellent way of understanding the price action and learing how you interact with the market in realtime via any particular trading instrument.

Other than that...

Last of all, this thread is for all traders (beginners, some experience, advance) using the Japanese Candlestick Hammer pattern as a trading tool in their trade methodology...

All perspectives about such are welcome especially when accompany with chart examples.


sorry i mean the part that you say that hammars only comfirm what you already now in the chart.



NihabaAshi
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Quote from jgadefelth:

How can i learn that? and is there more powerful candlepatterns that you use?

Regards
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Hi jgadefelth,

First, get some books on Japanese Candlesticks (any will do).

Hammer information in those books is an excellent pattern to start learning and concentrating on for about a year.

It's a pattern that has enough sub-groups that keeps a trader busy and active.

In fact, I know some traders its the only Japanese Candlestick pattern that they use with whatever primary trade method they have.

Also, some of the stuff I discussed in this thread are not found in any candlestick book so use it as supplemental trading tips.

Yes...there are stronger patterns but such will not be discussed in this thread.

Most are customized or discovered by advance traders using Japanese Candlesticks (most likely not found in any books).

A good way to learn is to post charts of what you consider to be Hammer patterns and ask questions about your charts as a few have already in this thread.

Also, as I already mentioned in this thread...

If your not willing to do live-recordings of the price action on your charts...

Learning and understanding the price action that involves the Hammer pattern or any other pattern not involving Japanese Candlesticks can be very difficult and frustrating.

NihabaAshi
 
NihabaAshi

I have read books from Nison about candlepatterns, but then i did not think of them as so good maybe I should just stick to the hammer pattern.

The thing about hammerpaterns that I think you mmean that I should learn is that the hammerpattern is a reversal signal in an reversal mayba and after it the main trend will continue. The hammer close higher than it oepn and that is a up signal.

If not here where can we start a new thread that conserns all the intresting candlepatterns?

Regards
 
Quote from jgadefelth:

NihabaAshi

I have read books from Nison about candlepatterns, but then i did not think of them as so good maybe I should just stick to the hammer pattern.

The thing about hammerpaterns that I think you mmean that I should learn is that the hammerpattern is a reversal signal in an reversal mayba and after it the main trend will continue. The hammer close higher than it oepn and that is a up signal.

If not here where can we start a new thread that conserns all the intresting candlepatterns?

Regards
More...

Hi jgadefelth,

Yes...I highly recommend starting with and sticking with Hammer patterns and their sub-groups...

Especially since you don't have a trading plan and this will allow you spend most of your efforts developing your trading plan without having too much on your plate at the same time via trying to learn Japanese Candlesticks.

Then...only then after you developed your trading plan...

Start learning about Hammer patterns.

Yes...Hammer patterns are reversal signals but can occur as continuation signals as you've already seen in one of the chart examples...

http://www.elitetrader.com/vb/attachment.php?s=&postid=802602

The same can be said about any other type of reversal signal.

Reason why traders that get fixated on trying to trade the trend (ignoring reversal signals because they think such is going against the trend)...

Are actually missing many trade signals that do trade with the trend because those trade signals have dual signals (reversal and continuation).

Therefore, trend trading for these types of traders can either be boring or frustrating.

As for talking about other candlestick patterns...

The main reason why I don't want to talk about other candlestick patterns in this thread eventhough someone else can (I just will not reply to it) is because I've been at ET long enough to see such usually dilutes the Hammer discussions and lead to other type of discussions that has nothing to do with Japanese Candlesticks nor about the price action that leads into a particular candlestick pattern.

Therefore, if you have questions about other candlestick patterns or anything to do with price action only trading and want my input...you can either send me a private message or email me.

Also, you can start another thread (I'll reply as long as it has nothing to do with stocks) via just click the Start a New Thread at the below link.

http://www.elitetrader.com/vb/forumdisplay.php?s=&forumid=33

NihabaAshi
 
July 29th Friday

Eurex Equity Index Derivative - DAX

Bullish White Hammer Pattern

Example of converting a profitable day trade via scaling out some contracts at a profit and letting it ride on a remainder as a swing trade.

NihabaAshi
 

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Quote from NihabaAshi:

July 29th Friday

Eurex Equity Index Derivative - DAX

Bullish White Hammer Pattern

Example of converting a profitable day trade via scaling out some contracts at a profit and letting it ride on a remainder as a swing trade.

NihabaAshi
More...
A couple of questions of interest:

1. Your chart shows [15] as your time interval but it is actually a 5-min chart (at least according to my charts). Does that [15] represent the time interval or am I incorrect in that assumption?

2. It looks like that position was taken at 19:45 CET (just 15 mins before the close). However, the profit targets for exits were taken during the European morning session. Do you trade all day and all night or is this an automated process (or are you using child labor :) )?

I was referred to this thread from the "Do you short term traders...." thread and have not read through the many pages here on the original Hammers thread, so excuse me if this has already been covered.
 
Hi FuturesTrader71,

Answer 1: The chart interval is shown in the lower right corner of the chart.

Answer 2: Most of my trades are day trades...averaging about 3 trade signals per day depending upon the trading instruments I'm following that particular day.

I don't get too many swing trade signals via the Hammer pattern...a few of them per month depending upon the trading instrument.

I don't use an automated system (mechanical system).

Further, the few times I do a swing trade or day trade during European hours...

I keep my mornings short and call it quits (stop trading) by 11am est.

Example...if I'm day trading the DAX at 3:15am est...

I'm usually done by 11am est.

The times I do trade the DAX (not my most traded trading instrument)...

I usually only trade it from 3am - 4am est.

I then go back to bed and will wake up to see how it is doing around 0815am est if there's a 0830am est key econ report...

If not...I stay in bed as long as possible (toddler has more control about this than you can imagine) :mad:

However, if I did a swing trade (overnight hold)...one of my rules for such is that I must have bank some profits either by the close or prior to going to bed and I keep a stop on the remainders as mentioned in that prior thread "Do you short term traders...".

NihabaAshi

Quote from FuturesTrader71:

A couple of questions of interest:

1. Your chart shows [15] as your time interval but it is actually a 5-min chart (at least according to my charts). Does that [15] represent the time interval or am I incorrect in that assumption?

2. It looks like that position was taken at 19:45 CET (just 15 mins before the close). However, the profit targets for exits were taken during the European morning session. Do you trade all day and all night or is this an automated process (or are you using child labor :) )?

I was referred to this thread from the "Do you short term traders...." thread and have not read through the many pages here on the original Hammers thread, so excuse me if this has already been covered.
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NihabaAshi,

Thanks for the reply. I was wondering if you have a particular post, thread or journal that explains your most common setups and your style. You have a lot of posts and it would take a lot of time to get to the basics. Can you point me to the right place so I can get some background?

Thanks.
 
Quote from FuturesTrader71:

NihabaAshi,

Thanks for the reply. I was wondering if you have a particular post, thread or journal that explains your most common setups and your style. You have a lot of posts and it would take a lot of time to get to the basics. Can you point me to the right place so I can get some background?

Thanks.
More...

Hi FT71,

I just sent you a private message that answers your question.

NihabaAshi
 
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