Trading Hammers (revisited)

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Quote from version77:

Okay, everybody. This is going to be my feeble attempt to add a
3-min ER2 chart and a 5-min ER2 chart showing that if you miss a
trade on the smaller time frame you can look to the next higher
time frame you watch to see it there is an entry in that time frame.

I will post the link to the 3-min and then the 5-min ER2 chart.

Hope this works...

Any comments on these charts are welcome. They are in GIF form
so I am not too sure how well they will look here at ET. If I use
PNG form they are too big for ET so I can not use Ensign charts so
I will use QuoteTracker charts using Snagit for commentary.

The 3-min:

display.php


And the 5-min:

display.php



P.S. If anyone has any idea how/where to store charts besides at
this website for easier or better posting I would be obliged for
any info on the subject... :)
More...
 
OK, but once the bullish hammer pattern has closed, and the price of next candle is now trading below the close of the hammer....

Is there anything that tells you to enter now vs. to wait for a few more ticks down? Or it's completely intution?


Quote from NihabaAshi:

Hi version77,

I have relatives from out of town so I'm very slow to responding to this thread or to emails with those sharing their charts of Hammer patterns either traded or saw.

Thus, I'm not trading nor watching the markets until Friday.

By the way, you can upload and link to your charts at DaCharts.

http://www.dacharts.com/posting.php



If there's any subjectivity in my trading its in the entry area below the close of the pattern signal price (bullish white hammer or bullish dark hammer) or above the close of the pattern signal price (bearish dark inverted hammer).

One pattern I may enter at a 2 tick better entry, another maybe 5 tick better entry, another 3 tick better entry...

No specific area just as long as its below the close of the bullish hammers or above the close of the bearish dark inverted hammers...

Regardless if by limit orders or market orders.

I usually average about 3 ticks below the close of bullish patterns or above the close of bearish patterns via my entry price.

Last of all...glad you've been studying the price action of Hammers because you'll notice as you did that if you get a Long Shadow on one particular interval regadless if its a dark hammer line, white hammer line or long legged doji line...

(critical understanding that's needed)

There could be a valid hammer pattern on different chart interval or in a different similar-like trading instrument.

Therefore, good Hammer traders don't need to have a dozen monitors to be able to find valid Hammer patterns in different chart intervals or in other trading instruments.

All they need to do is monitor a few trading instruments and 1-2 intervals...

Knowing if something looks interesting (long shadows)...they can quickly change interval or bring up a chart of the respected sister trading instruments.

One more reason why some of these good Hammer traders only trade Hammers because they are very active and can see a large area of the playing field by understanding the price action of Long Shadows.

NihabaAshi
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This question is about WRBs as profit targets. As I understand the WRB profit targets develop in real-time after the entry. The pt1 always develops on the same timeframe as the pattern signal. Other profit targets may be developed on smaller or higher timeframes depending on whether you feel "greedy" or whatever. Correct?

Now... To understand the development of a WRB profit target in real time. Suppose you're long after a white hammer pattern. The price is going up and producing a white candle. As the candle develops in real-time, there comes a moment where it becomes a WRB - ie. its body is greater than the bodies of 3 previous candles. You take pt1 profit at that very moment. You don't wait for this candle to close. Correct? Because if you wait for it to close it might no longer be a WRB.

Then you switch to a lower or higher timeframe and proceed in similar fashion. Correct?
 
Quote from sunnyskies:

dacharts.com
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Yes, yes... dacharts.com like Nihaba mentioned in his last post also!

You would of thought I would of discovered this by now. I do
email some charts but didn't realize I could send them to dacharts
at the same time... I will have to figure out how to do it real soon.

Thanks for the tip... :)
 
Quote from sunnyskies:

OK, but once the bullish hammer pattern has closed, and the price of next candle is now trading below the close of the hammer....

Is there anything that tells you to enter now vs. to wait for a few more ticks down? Or it's completely intution?
More...

It's completely subjective/intuition.

However, hopefully someday I can define (rules) this particular area in the trade management that concerns the better entry price.

Yet, I'm in no rush to do such because I rarely miss getting my desire entry price or I'm completely satisfied with where I've entered at in relationship to the pattern signal closing price.

NihabaAshi
 
Quote from NihabaAshi:

Hi version77,

I have relatives from out of town so I'm very slow to responding to this thread or to emails with those sharing their charts of Hammer patterns either traded or saw.

Thus, I'm not trading nor watching the markets until Friday.


NihabaAshi
More...


Hi Nihaba,

Hope you are having a great time visiting with your relatives. There
is nothing like getting away from it all for awhile... :)


I understand about the subjectivity as to when to enter after a
hammer line has been confirmed. This is true for me also. If I really
like the setup I will go in pretty quick. If not as enthusiastic, then
I will take a smaller position or sometimes even scale in trying to
get a better price average. For this I look at the 1-min price action.

I agree that you don't need a lot of trading instruments on your
plate at the same time. It makes it hard (at least for me) to watch
and understand the price action if looking at too many at once.

And your final comment about Long Shadows being a signal
and to quickly look for oppurtunities in other intervals and sister
trading instruments is very important.
 
Quote from sunnyskies:

This question is about WRBs as profit targets. As I understand the WRB profit targets develop in real-time after the entry. The pt1 always develops on the same timeframe as the pattern signal. Other profit targets may be developed on smaller or higher timeframes depending on whether you feel "greedy" or whatever. Correct?...
More...

Yes but my prior trades of the day have an impact on this decision.

For example...although I don't have daily profit goals...

If I'm happy with my profits or happy with the way I've been following my trading plan for the trading day...

Then I get a trade that's doing well and has reached its pt1...

I'll get greedy and try to ride the trade by increasing the chart interval in an attempt to catch a bigger pt2 WRB, pt3 WRB and so on.

The opposite is true also...if my trades for the day have rarely been reaching a pt2 WRB after increasing that chart interval...

I'll get to the point where I make a decision to stop increasing the chart intervals for those WRBs and just either use the pattern signal interval for all pt WRBs or use a lower chart interval to take WRBs that are faster in their development.

...Now... To understand the development of a WRB profit target in real time. Suppose you're long after a white hammer pattern. The price is going up and producing a white candle. As the candle develops in real-time, there comes a moment where it becomes a WRB - ie. its body is greater than the bodies of 3 previous candles. You take pt1 profit at that very moment. You don't wait for this candle to close. Correct? Because if you wait for it to close it might no longer be a WRB.

Then you switch to a lower or higher timeframe and proceed in similar fashion. Correct?
More...

I highly recommend to someone that's new to WRB analysis to take pt1 WRB as soon as it becomes a WRB...

At that very moment of a pt1 WRB eventhough the interval has not completed itself.

Can that pt1 WRB be automated ???

Yes...I know a few that does use such and for all their pt WRBs.

However, I have not asked them for any details about their automation of WRB exits eventhough they learned about WRB analysis from me.

Thus, I don't use any WRB automation exit system and can quickly do the math in my head for the WRB number that's > the average number of the prior three bodies...

I do this in my head as each interval completes until a WRB forms.

I then repeat the process for the next WRB if I'm still in trade with some remainders.

Once again, as stated above...someone new to WRB analysis should not get greedy when a pt1 WRB develops...

They must exit at that pt1 WRB.

Then...as more experience, intuition and success develops over the years...

Depending upon how one has been doing for the trading day in their trades prior to that trade, depending upon if its range day or trend day...

You'll know when to get greedy or not via increasing your chart interval or staying in the trade after a WRB forms.

This is a good example of how some discretionary traders can be using strict rules for a valid pattern signal...

Yet, can decide for the trade management after the pattern signal...

To either continue using strict rules, automation, intuition or a little of everything in this particular area.

However, regardless to the trade management decision...

There still needs to be a trading plan.

Without a trading plan...it becomes extremely difficult or impossible to exploit a valid Hammer pattern signal that has strict rules (no subjectivity nor intuition).

The above is true for any strategy regardless if its a price action only strategy or a strategy involving indicators.

Hmmm...I think we just went from a 300 level course to a 400 level course over that last few pages...

Will need to slow it down or else I'll scare away all the candlestick traders. :D

NihabaAshi
 
Quote from version77:

Hi Nihaba,

Hope you are having a great time visiting with your relatives. There
is nothing like getting away from it all for awhile... :)
More...

Yes...having a good time.

Their sleeping in late this morning and I'm using the quietness and freedom to catch up on a lot of emails, replies, market documentation of yesterday's price action and other work.

NihabaAshi
 
NA, once you take some off at pt1, you move stop on rest to BE, right? But once you take some off at pt2, do you move the stop to pt1 on remainder or keep it at BE?
 
Quote from sunnyskies:

NA, once you take some off at pt1, you move stop on rest to BE, right? But once you take some off at pt2, do you move the stop to pt1 on remainder or keep it at BE?
More...

I've gone as far into the trade management after the entry signal then I wanted to.

My exit method is slightly different when I trade size in comparison when I trade only one contract.

Beyond the above...I will not discuss in-depth info about my initial stop/loss protection method, trailing stop method nor any contingency plans because such is not specific to Hammer patterns (a secondary method for me).

Your questions deals with the trade management of my primary method and such is something I will not discuss in this thread.

However, is I mentioned or hinted in my early posts in the prior few days...

The results of my first few trades of the day will have a direct impact on the trade managment of my trades the remainder of the trading day depending upon if I'm happy with my profits and/or execution of the trading plan.

Just remember a few rules...

* If profitable for the day...don't let winners become losers (nothing less than breakeven).

* If not profitable for the day...don't let winners become breakeven trades (trailing stop must be at a profit if hit).

Simply, my trade management is not a hat that fits all sizes.

Thus, the results of the trading day going into a particular trade will often determine for me how I manage that particular trade after entry.

As usual when it comes to the trade management...what works for me may not work for someone else depending upon their trading instrument, trading style or pattern signal.

NihabaAshi
 
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