Trading Hammers (revisited)

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Quote from NihabaAshi:

sunnyskies,

Who's the data vendor of those charts ???

OANDA.

Chart 1h:[/b] Valid Hammer pattern via what I'm discussing in this thread.

The one you have labeled as Invalid has the Upper Shadow > Body...

The Body should be > Upper Shadow

Also, the Low should be < Lows of the prior three intervals via the price action on that chart.

UNDERSTAND PERFECTLY UP TO THIS POINT.

Yet, there's a dark WRB among that price action of the prior three intervals. That means the Low needs to also be less than the lows of the three intervals prior to the dark WRB.

SO THAT'S ANOTHER CONDITION? IF THERE'S AN WRB IN THE PRIOR 3 CANDLES, THEN THE LOW OF THE HAMMER SHOULD ALSO BE LOWER THAN ANY OF 3 CANDLES PRIOR TO THE WRB?


Chart 2h:[/b] The above answer what's wrong with the Invalid Hammer pattern.

GOT IT.

Chart 3h:[/b] Valid Hammer sub-group but not one of the sub-groups I'm discussing in this thread.

WHAT SUBGROUPS OF WHITE BULLISH HAMMER ARE YOU DICUSSING IN THIS THREAD? THERE'S 12 SUBGROUPS TOTAL? WHAT SUBGROUP IS THE HAMMER IN THIS CHART? CAN YOU NAME THE SUBGROUPS?

Chart 4h:[/b] Valid bullish hammer patterns being discussed by me in this thread.

Valid Pattern Signal: Yes
Valid Entry Signal: No

OK, THEY'RE VALID PATTERNS. WHY YOU SAY THERE'S NO VALID ENTRY SIGNAL? WHAT'S OUR ENTRY SIGNAL? I THOUGHT IT'S TAKEOUT OF THE HAMMER HIGH.

Thus, would have never had an opportunity to take those two trade signals (see my prior discussions with FuturesTrader71)...

http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=1&pagenumber=104

Chart 5h:[/b] My reply for this is the anwers above about the invalid patterns.

GOT IT.

Thanks for the charts to correlate with your Hammer pattern analysis.

THANK YOU FOR TAKING THE TIME..

NihabaAshi[/b] [/B]
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Quote from sunnyskies:

SO THAT'S ANOTHER CONDITION? IF THERE'S AN WRB IN THE PRIOR 3 CANDLES, THEN THE LOW OF THE HAMMER SHOULD ALSO BE LOWER THAN ANY OF 3 CANDLES PRIOR TO THE WRB?

WHAT SUBGROUPS OF WHITE BULLISH HAMMER ARE YOU DICUSSING IN THIS THREAD? THERE'S 12 SUBGROUPS TOTAL? WHAT SUBGROUP IS THE HAMMER IN THIS CHART? CAN YOU NAME THE SUBGROUPS?

OK, THEY'RE VALID PATTERNS. WHY YOU SAY THERE'S NO VALID ENTRY SIGNAL? WHAT'S OUR ENTRY SIGNAL? I THOUGHT IT'S TAKEOUT OF THE HAMMER HIGH.

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I don't have any specific names for the sub-groups...

Such is not needed and I keep them in a big binder folder with their dvd live-recordings...

They are organized by their price action that occurs prior to the White Hammer Line.

However, as you noted...there's a price action that doesn't involve a dark WRB and one that does...

Telling you that's two different sub-groups :cool:

Thus, don't worry about the other sub-groups because I will not discuss them in this thread other than the fact if someone post their own chart of one of the other sub-groups...

I'll respond by saying something like...

Its a valid pattern but not one of the sub-groups I'm discussing in this thread.

However, go back to that message post where I categorized the ones that I am talking about...

http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=1&pagenumber=72

All my chart examples will correlate to those charts and any other charts I will post in this thread.

Your other question is already answered in my earlier replies today to FT71 and you about the difference in my pattern signal and my entry signal.

Therefore, my entry signal is not the take out of the Hammer high.

You may have gotten confused about me saying its a method used by others I know and those particular traders talked about such in that old Tradin Hammers thread.

NihabaAshi
 
This is a test to see if I'm seeing WRBs correctly according to your definition. Chart atached.



Quote from NihabaAshi:

Hi sunnyskies,

As you already know from prior conversations with you...

Profit targets are WRBs.

If Long...profit targets are WRB's that occurs at a higher price above the Long.

If Short...profit targets are WRB's that occurs at a lower price below the Short.

The above is via prior conversation so you must be talking about the WRB itself.

As explained in this thread and the prior Hammer thread about my interpretation of a WRB...

WRB (wide range body) > Prior three bodies

The number three is not magical and you can use 4,5, 6 or whatever.

The above has already been discussed in this thread.

What exactly is voodoo to you about the above ???

However, I will expand on this topic a little more…

Someone recently told me they prefer to use the words expansion body instead of WRB or instead of Expansion Range.

Range = Difference between high and low (I’ve see this term used in general TA discussions especially when using bar charts)

Body = Difference between close and open (This term tend to be used in Japanese Candlesticks discussions)

Yes (before you ask)...range and body can be the same if in the case of a White WRB when the high = close and the low = open

Now…the only thing I can think that may be confusing to you to prompt you to say its like voodoo is that your ONLY looking at the charts.

In my annotated charts you’ll see the use of the words pt (profit target levels).

You’ll also see in the charts that once an interval becomes a WRB (prior to the interval completing itself)…it’s a WRB and profits should be taken.

Example…lets say your Pattern Signal is via the 15min chart interval at 10am est.

The next interval starts at 1015am est.

However, the current interval becomes a WRB at 1012am est…3mins remaining in the interval formation.

If you stay in the trade beyond the WRB level…its pure greed and your at risk of seeing price retrace until its no longer a WRB upon completion at 1015am est.

I will often let it ride (stay longer) because I’m very familiar with WRB and the fact that I will often drop to a lower chart interval to see if there are any continuation signals to tell me it’s a good time to get greedy.

If you exit the trade prior to the WRB level being reached…your obviously either leaving money on the table or got a trade signal that will threaten your current open position.

With that said above (hopefully its not still voodoo to you)…

There’s a difference between WRB in my Pattern Signal and a WRB in my Profit Targets.

• Pattern Signal WRBs are WRBs upon completion of the interval.

• Profit Target WRBs are WRBs that can form prior to the interval completing itself.



Regardless if its a white WRB or a dark WRB...

It's more like a zone via area between the Close and the Open.

Via a past conversation here at ET in the thread by Riskshaw Man called Are we at Support that included the following chart example I posted...

http://www.elitetrader.com/vb/attachment.php?s=&postid=716793

In that annotated chart are what I call candlestick s/r levels via WRBs.

Simply, after the formation of a WRB...

I start preparing to trade because a trade signal is most likely sooner than later.

Thus, WRB tend to represent a zone area and not a specific price like a line drawn in the sand.

Therefore, sometimes when I'm at a profit and the current interval hasn't produced a WRB to tell me its time to exit the trade...

If price has reached the zone area of a prior WRB...I'll exit the position prior to the current price action becomes a WRB itself.

I don't do that all the time...just sometimes.



Of course there are more rules.

I will not discuss all the rules for the particular Bullish White Hammer, Bullish Dark Hammer and Bearish Dark Inverted Hammer in this thread all at once in one message post...

Handing it to someone on a silver platter.

Yet, I will only reveal/discuss each rule as I respond to traders posting chart examples and asking questions about the price action in their chart examples...

This ensures a level of participation I’m satisfied with.

My point with that as you know...

Is to force the reader to learn to understand the price action and its pattern...

As they slowly piece the puzzle together with my help and with the help of others that have so far been posting charts.

By the way...please re-read the thread and look for a post where I categorized the types of patterns I'm discussing...

Print it out or write it down or save a direct link to that message post.

Also while your re-reading...you will find that I've discussed more rules than what you think so far via saying the below quote:



Once again…yes to answer your above questions...

There has been more rules discussed in this thread so far than the 2 rules you've posted above...

Two rules you've posted incorrectly.

The rules I've discussed so far all correlate to the chart examples I've
posted so far.

In addition, I will talk about more rules as this thread progresses.

Eventually, all rules about the Pattern Signal itself for each of the Hammers I'm discussing in this thread (Bullish White Hammer, Bullish Dark Hammer, Bearish Dark Inverted Hammer) will be disclosed and I will nicely put in categorize it.

I also plan (have been so far) to discuss some (not all) of the trade management stuff that occurs after entry so as the profit target discussion above concerning WRBs.

When will I reveal all the rules ???

After a hundred or so charts by me and at it will only be posted to those interested via pm after I ask the moderator to close the thread.

Until then...your just going to need to read carefully (continue reading until the thread concludes) and write down whatever rules that were stated by me and make sure you put them under the right Hammer sub-group along with the chart examples…

http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=1&pagenumber=72

Hopefully, others will do the same about whatever Hammer patterns they are trading so that this thread is more than about my three patterns and its sub-groups.

With that said...

Besides...there's no rush on revealing all the rules all at once because the market will be here next week, next month and next year.

Hopefully, before this thread concludes…you’ll be able to answer your own questions and then show verification of your understanding via posting your own charts of Hammer patterns.

NihabaAshi
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Quote from sunnyskies:

This is a test to see if I'm seeing WRBs correctly according to your definition. Chart atached.
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http://www.elitetrader.com/vb/attachment.php?s=&postid=820588

Yes...perfect.

Also, in your chart example above...you commented about the small WRBs.

Its the reason why I know some traders that use WRB analysis that don't like the number 3 that I use.

They will use a higher number requirement.

Thus, use whatever number you like but I don't recommend using anything below the number three.

Quote from sunnyskies:

Alrite.

1) Were these two subgroups picked by you for description because they're most reliable?

2) What is your entry method?
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Answer 1: They are very reliable and they aren't the most reliable ones.

If your wondering why I selected these particular ones to discuss...

It's because they are the easiest ones to understand out of the ones that are reliable.

Answer 2: I have replied to your question before and to FT71 but you have asked it again.

That tells me you either don't understand what I've said about my Entry Signal today or that your asking a completely different question.

Thus, I'm going to assume I'm getting confused with the words Enty Signal and Entry Method.

Therefore, you must be talking about my order execution and not talking about the Entry Signal stuff I've discussed a few times today so far ???

NihabaAshi
 
Sunnyskies,

Are you going to post chart examples of your particular type of Hammer pattern that you trade ???

I know your not new to Hammer pattern analysis because I remember you said once here at ET (last year) that you have a reliable Hammer pattern (80%).

In addition, you participated in the prior Hammer thread that was started by PetaDollar.

Regardless, I'm not asking you to reveal any of your rules nor trading plan that deals with your particular Hammer sub-group.

I'm asking for chart examples and I'm sure others here would welcome such.

In addition, if I have any questions about the Hammer patterns in your charts I'll just pm you those questions to you.

If you want...you can send those chart examples to me via pm or email via any method of your choice.

NihabaAshi
 
Well, yes I'm confused. For example I enter when the high of the hammer signal (pattern) is taken out. I don't understand when you enter. Like when you got a hammer that qualifies as the one you want to trade (i think you call that a pattern as opposed to a line), when/how do you actually enter?


Quote from NihabaAshi:

Answer 2: I have replied to your question before and to FT71 but you have asked it again.

That tells me you either don't understand what I've said about my Entry Signal today or that your asking a completely different question.

Thus, I'm going to assume I'm getting confused with the words Enty Signal and Entry Method.

Therefore, you must be talking about my order execution and not talking about the Entry Signal stuff I've discussed a few times today so far ???

NihabaAshi
More...
 
OK but the hit rate has since gone down to 75%. And the trade management is very simplistic, meaning there's a stop equal to the range of the hammer and a profit target of the same size. Nothing else, no breakeven, no trailing.


Quote from NihabaAshi:

Sunnyskies,

Are you going to post chart examples of your particular type of Hammer pattern that you trade ???

I know your not new to Hammer pattern analysis because I remember you said once here at ET (last year) that you have a reliable Hammer pattern (80%).

In addition, you participated in the prior Hammer thread that was started by PetaDollar.

Regardless, I'm not asking you to reveal any of your rules nor trading plan that deals with your particular Hammer sub-group.

I'm asking for chart examples and I'm sure others here would welcome such.

In addition, if I have any questions about the Hammer patterns in your charts I'll just pm you those questions to you.

If you want...you can send those chart examples to me via pm or email via any method of your choice.

NihabaAshi
More...
 
I'm now concentrating on FOREX. And you said that volume is one of the factors that determine whther a line is a valid pattern signal or not. FOREX doesn't really have volume. So do you think this fact would severely hinder the identification of high probability patterns or not?
 
Quote from sunnyskies:

OK but the hit rate has since gone down to 75%. And the trade management is very simplistic, meaning there's a stop equal to the range of the hammer and a profit target of the same size. Nothing else, no breakeven, no trailing.
More...

Hi sunnyskies,

What time frame charts do you use in trading hammers in forex? How many trades do you make per day?

Thanks
 
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