Seems to have qualified under all rules, yet failed.
Trading Hammers (revisited)
- Thread starter NihabaAshi
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I remember at least four different times in this thread of repeating two particular criteria involving the Bullish White Hammer pattern.
I was hoping you have read through the thread carefully along with writing down the detailed criteria that I've revealed so far in each particular sub-group...
Especially the ones I've mentioned several times.
The below link will tell you why the pattern in your chart is not a valid pattern.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=5&pagenumber=12
Later on in the thread you said the following...
I replied with the following...
Please write down the rules (the ones that have been revealed so far) and make some sort of a check list so that you'll know if what you see is or is not a valid pattern via my charts.
Getting back to your chart...you have two long dark (red) bodies prior to the White Hammer Line.
One of those dark (red) bodies is a Dark WRB.
Do you remember the if rule that you or someone had summarized nicely in this thread about WRB's among the prior three intervals ???
Therefore, that means that the Long Lower Shadow of the White Hammer Line will be measured against the lower shadows and bodies of the three intervals before the WRB.
The above you already knew about and discussed.
However, what about the intervals between the WRB and the White Hammer Line ???
You already knew that they are not ignored.
Thus, the Long Lower Shadow of the White Hammer Line is also measured against the lower shadows and bodies of any intervals between the WRB and the White Hammer Line if there's a WRB among the prior three intervals.
Knowing that...you should quickly realize why your chart is not a valid Bullish White Hammer pattern I'm discussing in this thread.
Just the same...be aware that there are other sub-groups being traded by other traders and my one way of seeing a Bullish White Hammer pattern may be completely different than someone else favorite Bullish White Hammer pattern.
Thus, I know a lot of traders that your chart would have been a valid pattern for them mainly because they do not put any emphasis on the length (depth) of the long lower shadows nor comparing it to prior intervals price action.
With that said...lets pretend that was a valid pattern that I'm discussing in this thread.
You know I use an Entry Signal.
Although I don't have a live-recording of your chart price action...
I doubt I would have had a valid entry signal based upon the location of the open and low in the first interval after the pattern signal.
Therefore, most likely I would have never taken that trade had it been a valid pattern signal.
Further, you know I do not place my initial stop/loss protection at the low of a bullish white hammer.
However, based upon the fact my stop/loss is a little more complex than yours...
You once said its like voodoo...I will not go into anymore details about where I would have placed my initial stop/loss placement.
However, I will mention (not sure if I have already) but wil not go into in-depth detail about it...
After my initial stop/loss is set...
I have a trigger price that when price moves in my favor...
When that trigger price is reached...
I move my inital stop/loss protection into a breakeven stop.
In your chart...had that been a valid trade signal...
My trigger price would have been reached.
Thus, the worst outcome of that trade would have been a breakeven trade.
Also, we already talked about contingency plans.
You talked about reversing the trade if you got a pattern signal for such...
I remember my reply along with posting a chart saying I trade something similar.
http://www.elitetrader.com/vb/attachment.php?s=&postid=828434
Here's some hints about the commonality in the above two charts about Dark Hammer Lines...
* The confirmation candlestick for a reversal was a Dark WRB and it closed inside the range of the long lower shadow of the Dark Hammer Line via the following...
Close of Dark WRB > or = Low of the Hammer Line
Thus, if the above criteria isn't qualified...
I ignore reversing a Long into a Short when the close of the Dark WRB is below the low of the Dark Hammer Line (outside the range of the long lower shadow) because its chasing the price so far down that it can easily reverse (counter-thrust) back upwards...
Resulting in another losing trade.
I use the above rule also for failed White Hammer patterns to determine if I'm going to reverse the Long into a Short regardless if the stop of the Long position had been hit or not.
Thus, in your chart of a White Hammer pattern by someone else standards (not mine)...
The Dark WRB that formed after the White Hammer Line...below the support of the prior three intervals and below the range of the long lower shadow of the White Hammer Line...
Would have been a trade Short signal (reversing the Long into a Short) I would have ignored.
Instead, after seeing that Dark WRB close below the range of the long lower shadow of the Hammer Line (dark or white)...
I would have start preparing for a Long signal if one appears.
Of course there are other rules about the Dark WRB in this contingency plan involving reversing a losing trade but I won't go into any more details about such because we will be discussing a completely different price action that should be an entirely different thread discussion.
Just remember this...pattern signals usually appear within a few intervals after an appearance of a WRB (dark or white).
Such pattern signals can be either reversal or continuation signals.
The above is just a tip about when not to trade price noise.
No WRBs...more often than not...it is juse price noise with poor risk control if traded.
Geeesh...another +300 level classroom post.
NihabaAshi
Actually, I have written them down. And I've carefully read your every post on candlesticks on ET. And it's still not easy. If someone is better at grasping this material than me then I ask them to post on this thread to help me and others understand better. Pulling rules out of many different posts on different threads is not easy to me but I'm trying my best. Also the rules are not symmetrical for white hammers, dark hammers and dark inverted hammers and that complicates things further. If the rules were posted in one place, of course it would be easier but you think having people do their legwork is more useful to them and I agree. But this way is not easy and my progress is what you see reflected in my posts.
And now I will summarize all "revealed" rules for white hammer pattern. The purpose is that this will be the checklist that I evaluate the pattern with and that next time there won't be this situation where I'm not using some rule that you're using and mentioned somewhere earlier. So please verify this checklist for White Bullish Hammer:
This will be the abbreviations: LS = Lower Shadow of a candle; B = Body of a candle, US = Upper Shadow of a candle; WH = Bullish White Hammer; L = Low, H = High, O = Open, C = Close. Rules Checklist:
1) LS of WH > B of WH > US of WH
2) LS of WH longer than LSs of 3 prior candles
3) L of WH < Ls of 3 prior candles
4) LS of WH longer than Bs of 3 prior candles
5) If one of 3 prior candles is a red WRB, then LS of WH must ALSO be longer than LSs of 3 candles prior to the red WRB and LS of WH must ALSO be longer than the Bs of 3 candles prior to the red WRB.
This will be the abbreviations: LS = Lower Shadow of a candle; B = Body of a candle, US = Upper Shadow of a candle; WH = Bullish White Hammer; L = Low, H = High, O = Open, C = Close. Rules Checklist:
1) LS of WH > B of WH > US of WH
2) LS of WH longer than LSs of 3 prior candles
3) L of WH < Ls of 3 prior candles
4) LS of WH longer than Bs of 3 prior candles
5) If one of 3 prior candles is a red WRB, then LS of WH must ALSO be longer than LSs of 3 candles prior to the red WRB and LS of WH must ALSO be longer than the Bs of 3 candles prior to the red WRB.
Ah...there's part of the problem.
You've been referencing different Hammer patterns in other past threads here at ET.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=18381
Info: I've never talked about the particular sub-groups in this thread in-depth (with rules) in the past here at ET in other threads.
This thread is an extension of the above thread and other threads not mentioned because I felt they were too generic without any in-depth discussions of a particular Hammer pattern sub-group.
In addition, past threads were mainly based upon Hammer patterns and indicators.
This thread is more microscopic, price action only (no indicators) and much more emphasis on the reasons why Hammer Lines and Patterns form.
Yet, your more than welcome to discuss and reference any past info in another thread via a quote...
Such will clearly show the difference in the sub-groups in this thread in comparison to the different sub-groups in past threads that had indicators as a criteria or some other type of method as a criteria.
Once again...as a reminder...there are over a dozen different White Hammer patterns alone...
I believe I've shown charts and discuss many of those different White Hammer patterns in the past here at ET in many different threads over the years.
Also, you have in error a few times believe the rules for the the Bullish White Hammer, Bullish Dark Hammer or Bearish Dark Inverted Hammer...
Should be the same for sake of simplicity.
To believe such is to say you are intentionally ignoring the difference in their price action that occurs prior to their Hammer Lines...
A price action that defines the price movement as it traverses into a pattern that can be traded with improved results in comparison to the mentality of one hat fits all sizes.
To seek such simplicity (same rules applied to different types of Hammer patterns) is a huge mistake especially when I continue and will continue telling you how important it is to understand the price action that occurs prior to the Hammer Line.
The thing I don't understand is that on on two occassions you have quoted the criteria after reading a reply I had to someone else in this thread and then at a later date you post a chart that doesn't correlate even with what you wrote yourself...
For example...I posted the following rule...
Bullish White Hammer
You then posted at a later date via saying the following...
You were stating the above as fact and it didn't seem as if you were asking any questions about whether its the prior 3 intervals or the prior 4 intervals.
However, at a later date (after I stated such)...I realized via a discussion with you that you realized there could be a WRB among those prior intervals although not required.
This told me that your quote above were all question marks.
Therefore, I will say it again with more emphasis.
--------------------
The following are the DONT's when discussing my charts and their asscociated rules I've discussed in this thread:
* Don't alter (change) my rules
* Don't quote a rule incorrectly.
It's best to either post a direct link to something I've said in this thread or use ET quote command of something I've said if you have questions about a particular rule
* Don't assume I'm trading a particular hammer sub-group just because someone else posted a chart about such especially after I've said in reply to that trader's chart I don't trade that particular Hammer sub-group
(In reference to the White Inverted Hammer pattern)
* Don't assume because its a rule for one particular sub-group its the same rule in another particular sub-group
* Don't reference rules from another thread here at ET about a completely different Hammer sub-group that was discussed by me
* Don't apply what someone else had said in the past here at ET in another thread about Hammers to my Hammer sub-groups in this thread
--------------------
All the above you've done at least once in this thread.
Thus, in my opinion is a big reason why your reading of what I say in this thread seems either complicated or not an easy read.
Yet...today you finally summarized (something I've been waiting for you to do) the rules for the Bullish White Hammer...
You did such correctly and hopefully your going to do the same for the other sub-groups I've categorized in this thread.
Further, your summary of the Bullish White Hammer (what has been revealed so far) is correct:
Sunnyskies...don't forget something about that WRB (dark or white) if such is among those prior three intervals.
Sub-group: Reversal Signal
* If there's a Dark (red) WRB among the prior three intervals...don't measure the Lower Shadow of the White Hammer Line to the WRB body.
However, the Lower Shadow of the White Hammer must still be LOWER than the low of the Dark (red) WRB...
Although such is OK in another sub-group (not reliable) but not via the one I'm discussing in this thread (reliable).
Sub-group: Continuation Signal
* If there's a White (green) WRB among the prior three intervals...
This is a different continuation signal sub-group (not as reliable) and not the one I'm discussing in this thread (more reliable).
The continuation signal I'm discussing in this thread has at least three intervals between the White (green) WRB and the White Hammer Line.
The one thing I will do is this...
I will make sure for now on I put the * next to a statement that's a rule...
I've been doing such for awhile now but not in the beginning of this thread.
Yet, rules that someone posted as a quote by me in an earlier discussion in this thread...
I assume that implies they know its a rule eventhough I didn't have * next to the statement.
I have also darken the green highlight area on my charts for more emphasis on the price action of importance that's occuring prior to the Hammer Lines.
What's the page number we are now on to get to the point of summarizing correctly at least 4 of the above criteria that was first revealed earlier in this thread about the Bullish White Hammer pattern ???
To anyone else reading this out of the 12k views so far...
I'm not going to summarize all the rules for you in one small message post.
To do such will not reveal to me if you are writing them down correctly or applying them correctly...
One of the reasons why I put so much emphasis on posting charts.
Your charts allows me to see what you see...
Regardless to what I have said and regardless to the number of times I repeat something I've said in this thread.
Keep posting charts about what you think I'm seeing or charts of your own personal Hammer pattern method...
Preferably the latter above so that we can get a different perspective of Hammer patterns besides my own.
NihabaAshi
Updated Rules Checklist for White Bullish Hammer sub-groups being discussed in this thread:
This will be the abbreviations: LS = Lower Shadow of a candle; B = Body of a candle, US = Upper Shadow of a candle; WH = Bullish White Hammer; L = Low, H = High, O = Open, C = Close. Rules Checklist:
1) LS of WH > B of WH > US of WH
2) LS of WH longer than LSs of 3 prior candles
3) L of WH < Ls of 3 prior candles
4) LS of WH longer than Bs of 3 prior candles
5) If one of 3 prior candles is a red WRB, then LS of WH must ALSO be longer than LSs of 3 candles prior to the red WRB and LS of WH must ALSO be longer than the Bs of 3 candles prior to the red WRB.
6) For Reversal Signal: if there's a red WRB among 3 prior candles - then LS of WH does NOT have to be longer than the red WRB's B.
7) For Continuation Signal: There must be at least 3 candles between most recent green WRB and WH.
This will be the abbreviations: LS = Lower Shadow of a candle; B = Body of a candle, US = Upper Shadow of a candle; WH = Bullish White Hammer; L = Low, H = High, O = Open, C = Close. Rules Checklist:
1) LS of WH > B of WH > US of WH
2) LS of WH longer than LSs of 3 prior candles
3) L of WH < Ls of 3 prior candles
4) LS of WH longer than Bs of 3 prior candles
5) If one of 3 prior candles is a red WRB, then LS of WH must ALSO be longer than LSs of 3 candles prior to the red WRB and LS of WH must ALSO be longer than the Bs of 3 candles prior to the red WRB.
6) For Reversal Signal: if there's a red WRB among 3 prior candles - then LS of WH does NOT have to be longer than the red WRB's B.
7) For Continuation Signal: There must be at least 3 candles between most recent green WRB and WH.
Seems I have read a few times in this thread that if one of the 3
prior candles before a White Hammer is a red WRB that the LS
of the WH must ALSO be longer than the Bs of the 3 candles
prior to the red WRB. (As stated above by sunnyskies).
Does this mean if there are 2 WRB's in a row it disqualifies the WH?
Or can you have 2,3,4 or more WRB's before this rule applies?
(I am assuming you can have more than 1 red WRB)...
And can I ask what the significance is of why the size of the 3 prior
bars before the WRB(s) before the WH have to be smaller than the
shadow of the WH?
One more question.
In this thread we have 2 Hammers for going Long. One is the WH,
and the other is the DH. In Gregory L. Morris's book he states the
Dragonfly doji is a special case of the Hanging Man and Hammer lines.
As you know, it is a line which is right between the WH and the DH
since it's close is the same as it's open where as the WH has it's
close above it's open and the DH has it's close below it's open.
I am wondering if this could be included in this discussion or if there
is a reason why it shouldn't be included. (Curious). I realize there
would be different rules since there would be just one long shadow
with no body (or a small one) involved.
P.S. Thread is getting better and better.
If there are two back to back WRB's...
It means that the long lower shadow of the White Hammer will need to be very long...long enough so that its longer than the smaller WRB.
Simply, when there are back to back WRB's...I don't compare the most recent WRB to the length of the White Hammer long lower shadow.
Thus, the WRB that formed before the most recent WRB does get measured against the White Hammer long lower shadow as long as its one of the three intervals that occurred prior to the most recent WRB.
Replying to your next question...
I don't consider Dojis (long logged dojis) as part of the Hammer family.
Dojis have there own sub-groups.
That's one of the reasons why I don't discuss it in this thread.
Another reason is that if you change the chart interval of a long legged doji...
Most likely your going to see either a Hammer Line or valid Hammer Pattern due to the fact that Dojis and Hammers are part of the Long Shadow Family.
I discussed early about a topic called Candlestick Blending or De-Blending to allow seeing more of the playing field while only concentrating on 1-2 chart intervals for those traders not using multiple monitor workstations.
For example via the 5min chart interval...you visually merge two intervals to produce and image of the 10min chart interval or merge three intervals to produce an image of the 15min chart interval based upon the Open of the first interval in the merge and the Close of the last interval in the merge.
Thus, if you can talk about Dojis in this thread but preferrably as part of the blending or de-blending of intervals that produces a Hammer Line or Hammer Patterns.
However, I myself will not participate in discussions of Dojis all by itself in this thread unless it involves the blending or de-blending of Hammers.
Therefore...to only discuss dojis all by itself will open the door for discussions of all those other candlestick patterns and their respected sub-groups of the Long Shadow Family.
Besides...most traders will just show up and make a comment (not useful comment) about dojis...not post charts or not share any rules nor give any peek inside their trading plan for trading such...
The above has been the norm here at ET and I don't expect it to change.
There's a learning process to trading and too many traders want it all presented in front of them all at once.
Diluting this Hammer discussions with other candlestick pattern discussions will encourage that mentality of trying to find a short cut or trying to absorb too much info at once.
Another option is to start either a different thread on Dojis or a different thread on Long Shadows.
Yet, if you do the latter above (Long Shadow thread)...please include a link in your opening post to this Trading Hammer (revisited) thread.
I will participate in that thread but I will not carry its discussion because I'm not the thread starter.
Long Shadow Family:
* White Hammers
* Dark Hammers
* Long Legged Dojis
* White Shooting Stars
* Dark Shooting Stars
* Dark Inverted Hammers
* White Inverted Hammers
* Small Real Bodies (dark or white) with Long Shadows
* White Hanging Man
* Dark Hanging Man
There's one more in the above but at the moment I just can't remember it.
NihabaAshi
version77, due to your question I have adjusted rules 5 and 6.
Updated Rules Checklist for White Bullish Hammer sub-groups being discussed in this thread:
This will be the abbreviations: LS = Lower Shadow of a candle; B = Body of a candle, US = Upper Shadow of a candle; WH = Bullish White Hammer; L = Low, H = High, O = Open, C = Close. Rules Checklist:
1) LS of WH > B of WH > US of WH
2) LS of WH longer than LSs of 3 prior candles
3) L of WH < Ls of 3 prior candles
4) LS of WH longer than Bs of 3 prior candles
5) If one or more of 3 prior candles is a red WRB, then LS of WH must ALSO be longer than LSs of 3 candles prior to the MOST RECENT red WRB and LS of WH must ALSO be longer than the Bs of 3 candles prior to the MOST RECENT red WRB.
6) For Reversal Signal: if there's one or more red WRBs among 3 prior candles - then LS of WH does NOT have to be longer than the MOST RECENT red WRB's B.
7) For Continuation Signal: There must be at least 3 candles between most recent green WRB and WH.
Updated Rules Checklist for White Bullish Hammer sub-groups being discussed in this thread:
This will be the abbreviations: LS = Lower Shadow of a candle; B = Body of a candle, US = Upper Shadow of a candle; WH = Bullish White Hammer; L = Low, H = High, O = Open, C = Close. Rules Checklist:
1) LS of WH > B of WH > US of WH
2) LS of WH longer than LSs of 3 prior candles
3) L of WH < Ls of 3 prior candles
4) LS of WH longer than Bs of 3 prior candles
5) If one or more of 3 prior candles is a red WRB, then LS of WH must ALSO be longer than LSs of 3 candles prior to the MOST RECENT red WRB and LS of WH must ALSO be longer than the Bs of 3 candles prior to the MOST RECENT red WRB.
6) For Reversal Signal: if there's one or more red WRBs among 3 prior candles - then LS of WH does NOT have to be longer than the MOST RECENT red WRB's B.
7) For Continuation Signal: There must be at least 3 candles between most recent green WRB and WH.
September 7th Wednesday
Eurex Index Derivative - DAX
Bullish White Hammer Pattern 3min chart
Sub-Group: reversal signal
I've seen many traders ask what leads the Eminis or Eurex.
More often than not...key economic reports, regular schedule market events or breaking world news will produce a trend.
Today something different occurred via key economic report releases that I've seen happen often (more often than not) when a key economic report has been re-scheduled for whatever reasons.
Normally on Wednesday's at 1030am est is the release of the EIA Petroleum Status Report...
Price reactions usually start around 1015am est.
However, due to the Monday holiday...
That key report will be released tomorrow on Thursday at 1030am est.
Yet, more often than not...many traders (retail and pros) will looks for trade signals (price reactions) to today's absent report at 1030am est.
Check out the Eminis (ES, ER2, YM and NQ) 3min chart between 1015am - 1030am est...
Do you see any Hammer Lines although not valid Hammer Patterns via my discussion of them in this thread ???
NihabaAshi
Eurex Index Derivative - DAX
Bullish White Hammer Pattern 3min chart
Sub-Group: reversal signal
I've seen many traders ask what leads the Eminis or Eurex.
More often than not...key economic reports, regular schedule market events or breaking world news will produce a trend.
Today something different occurred via key economic report releases that I've seen happen often (more often than not) when a key economic report has been re-scheduled for whatever reasons.
Normally on Wednesday's at 1030am est is the release of the EIA Petroleum Status Report...
Price reactions usually start around 1015am est.
However, due to the Monday holiday...
That key report will be released tomorrow on Thursday at 1030am est.
Yet, more often than not...many traders (retail and pros) will looks for trade signals (price reactions) to today's absent report at 1030am est.
Check out the Eminis (ES, ER2, YM and NQ) 3min chart between 1015am - 1030am est...
Do you see any Hammer Lines although not valid Hammer Patterns via my discussion of them in this thread ???
NihabaAshi
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