Trading Hammers (revisited)

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Quote from FuturesTrader71:

Can anyone comment on the validity of this dark hammer?

http://www.elitetrader.com/vb/attachment.php?s=&postid=822463

In an effort to understand hammer formations, I have set up a new account under my corp to take separate trades. I still have not gone over all of the material presented by NihabaAshi and others, but I felt that this was a hammer that was confirmed by prints. My entry was at 4906.0 with a stop at 4904.5. This was just an experiment but it worked out well. I took profits on the WRB bar at 4915.0. I held the trade from 1:24:11 PM EDT to 1:43:20 PM.

Would you guys consider this a valid hammer or was this a lucky trade?

I'm taking a trip to visit my office in Chicago this next week and I'm taking my Nison book with me along with a printout of this thread. Hopefully, I will be able to contribute and ask more intelligent questions soon after I get through all this material and educate myself.

Cheers and thanks to all for making this an interesting thread.
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Hi FT71,

I don't like the price action that lead into the Dark Hammer Line.

Thus, it wouldn't have crossed my radar screen as a Bullish Dark Hammer Pattern.

Among the prior three intervals is a white WRB that was the peak close in that upthrust that then pullback a little until the formation of the Dark Hammer Line.

I prefer to see smaller bodies in between the white WRB and the Dark Hammer Line...

Smaller via comparing the bodies to the long lower shadow of the Dark Hammer Line.

NihabaAshi
 
Quote from NihabaAshi:

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.

NihabaAshi
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First off all, let me say I greatly respect you as a trader and have enjoyed all your posts, and private discussions I have had with you about trading.

However, I would have to question whether one should be managing trades according to how you have traded that day. The market doesn't care how you have traded. I would think it would be better to manage trades according to what the market tells you.

Just my opinion.
 
Alrite.

Quote from NihabaAshi:

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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Quote from LondonUSTrader:

...However, I would have to question whether one should be managing trades according to how you have traded that day. The market doesn't care how you have traded. I would think it would be better to manage trades according to what the market tells you.

Just my opinion.
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Completely agree.

Yet...you misinterpreted what I said.

Trades are managed and adjusted accordingly to what the price action tells me.

Any adjustments due to greed or fear are made in reaction to key economic news...

I've already stated earlier in this thread and in many other threads how important key economic news reactions are important to price action only traders...

Which includes traders using candlestick analysis.

The adjustments are either via WRB analysis, position size analysis or both.

NihabaAshi
 
Quote from NihabaAshi:

Completely agree.

Yet...you misinterpreted what I said.

Trades are managed and adjusted accordingly to what the price action tells me.

Any adjustments due to greed or fear are made in reaction to key economic news...

I've already stated earlier in this thread and in many other threads how important key economic news reactions are important to price action only traders...

Which includes traders using candlestick analysis.

The adjustments are either via WRB analysis, position size analysis or both.

NihabaAshi
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Oh ok. Sorry for the misunderstanding, I must have read it wrong. Thanks for this thread, perhaps one of the most educational on ET. You are very generous sharing so much of your trade method with those on ET.
 
Quote from sunnyskies:

http://charts.dacharts.com/2005-08-25/0825-1.png

RED HAMMER

http://charts.dacharts.com/2005-08-25/0825-2.png

DONT KNOW WHAT THE HELL THIS WAS. BUT SOME TWEEZERS, ANYWAY LOOKED REALLY BULLISH.

Comments on trade management would be especially appreciated.
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http://charts.dacharts.com/2005-08-25/0825-1.png

What's the red dot exit (3rd exit) and why so late after a price decline ???

I think the Dark Inverted Hammer that occurred three intervals prior to that 3rd exit was a white (green) WRB prior to its completion as a Dark Inverted Hammer Line.

http://charts.dacharts.com/2005-08-25/0825-2.png

Looks ok to me although I don't know if you made any adjustments between the pt WRBs.

Based on the above charts with three exit lines in each...looks like your exiting in 1/3.

What was the "feeling" you got from reviewing your live-recordings ???

Did any of those pt WRBs occur at/near or as a reaction to any key economic report release ???

Let me re-emphasis the importance of the below as explained earlier in this thread...

* Live-recordings

* Key economic reports

You cannot learn how to make adjustments in your pt WRB (greed or fear) via hindsight charts alone.

Your pt1 WRB occurred just prior to the 10am est Help Wanted Index Report...

http://online.wsj.com/public/resources/documents/b-econoday.htm

You then banked some profits at that pt1 WRB...

Price then moves higher and then pullsback into the price area of that pt1 WRB...

Does your live-recording or your memory of the price action of the pullback tell you its stable price pullback, any bearish signals or anything to create fear ???

Did you get any clues from a different chart interval about that price pullback to create greed ???

How was your trading prior to that trade signal...discipline and following your trading plan...profitable or at a loss for the day ???

I remember you asked about volume before...where you analyzing the volume and price action of EuroFX as that trade signal or trade in EurUsd developed ???

After you answer the above questions for yourself...

You can determine how you would interpret a pt2 WRB, pt3 WRB and so on...

Via either leaving your chart interval the same as pt1 WRB chart interval, increasing your chart interval or changing the number of contracts for the pt2 WRB exit, pt3 WRB exit et cetera.

The above are things that will tell you about your trade mangement, help you define a trading plan for such along with helping you learn how to adapt from one trading day to the next via getting into the habit of answering those type of questions for yourself...

Day after day as you traverse from one pt WRB to the next pt WRB.

NihabaAshi
 
Quote from NihabaAshi:

http://charts.dacharts.com/2005-08-25/0825-1.png

What's the red dot exit (3rd exit) and why so late after a price decline ???

BECAUSE THE TRAILING STOP WAS NOT MOVED UP TO PT2, IT WAS KEPT AT PT1.

I think the Dark Inverted Hammer that occurred three intervals prior to that 3rd exit was a white (green) WRB prior to its completion as a Dark Inverted Hammer Line.

MAYBE, BUT I WAS WAITING FOR A WRB *ABOVE* PREVIOUS HIGHS AND ABOVE PT2 LEVEL.

http://charts.dacharts.com/2005-08-25/0825-2.png

Looks ok to me although I don't know if you made any adjustments between the pt WRBs.

Based on the above charts with three exit lines in each...looks like your exiting in 1/3.

YEA, IN 1/3S.

What was the "feeling" you got from reviewing your live-recordings ???

NO FEELINGS. CURRENTLY I HAVE LITTLE CLUE AS TO HOW MICROMANAGE WRBS. JUST STARTED WITH THEM. MAYBE WITH EXPERIENCE ILL GET BETTER, MAYBE NOT :)

Did any of those pt WRBs occur at/near or as a reaction to any key economic report release ???

THERE WAS NO IMPORTANT ONES ON THURSDAY.

Let me re-emphasis the importance of the below as explained earlier in this thread...

* Live-recordings

* Key economic reports

You cannot learn how to make adjustments in your pt WRB (greed or fear) via hindsight charts alone.

Your pt1 WRB occurred just prior to the 10am est Help Wanted Index Report...

http://online.wsj.com/public/resources/documents/b-econoday.htm

You then banked some profits at that pt1 WRB...

Price then moves higher and then pullsback into the price area of that pt1 WRB...

Does your live-recording or your memory of the price action of the pullback tell you its stable price pullback, any bearish signals or anything to create fear ???

FEAR FOR ME? HEH. I HAVE STOPS SO I HAVE NO FEAR :)

Did you get any clues from a different chart interval about that price pullback to create greed ???

NO:)

How was your trading prior to that trade signal...discipline and following your trading plan...profitable or at a loss for the day ???

PROFITABLE.

I remember you asked about volume before...where you analyzing the volume and price action of EuroFX as that trade signal or trade in EurUsd developed ???

NAH, IM NOT GONNA DO THAT.

After you answer the above questions for yourself...

You can determine how you would interpret a pt2 WRB, pt3 WRB and so on...

Via either leaving your chart interval the same as pt1 WRB chart interval, increasing your chart interval or changing the number of contracts for the pt2 WRB exit, pt3 WRB exit et cetera.

The above are things that will tell you about your trade mangement, help you define a trading plan for such along with helping you learn how to adapt from one trading day to the next via getting into the habit of answering those type of questions for yourself...

Day after day as you traverse from one pt WRB to the next pt WRB.

NihabaAshi
More...
 
August 29th Monday

CME Emini - ER2

Bullish White Hammer Pattern
Sub-Group: continuation signal

With Hurricane Katrina causing havoc on the U.S. Gulf Oil and Gas supplies...

Such was the big picture of the trading day along with the decline of Light Crude Oil (CL) after its gap to the upside while Natural Gas (NG) fought hard to keep its upside gap gains.

In addition, have you ever heard another trader saying its not wise to trade the news because its already priced in ???

I prefer to see it as don't hesitate when you get a trade signal that was obviously news driven.

NihabaAshi
 

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