What do you mean by tunnel vision? If there's a valid pattern on the chart and a valid entry trigger and there's no news, reports, etc. - you wouldn't take it for sure?
Trading Hammers (revisited)
- Thread starter NihabaAshi
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There's the breakevens, the losers and the winners over 1.5 weeks. I cant make any sense of it.
http://charts.dacharts.com/2005-09-16/hammers/
http://charts.dacharts.com/2005-09-16/hammers/
Just looked at your charts-- you are right, can't make sense of what makes one work and another not with these charts.
Next question is: if you look back farther in time, does the particular price level of each entry have any meaning? I would certainly take a look at this with longer term S/R in mind. You might end up seeing that the hammer has a much better chance to work if that price level has some meaning. (E.g., it's been bouncing off that level for the past week.)
Lastly I would say you need about 10 trades of each type have a chance to see differences like this.
PD
Next question is: if you look back farther in time, does the particular price level of each entry have any meaning? I would certainly take a look at this with longer term S/R in mind. You might end up seeing that the hammer has a much better chance to work if that price level has some meaning. (E.g., it's been bouncing off that level for the past week.)
Lastly I would say you need about 10 trades of each type have a chance to see differences like this.
PD
Based upon that directory...you have the following:
* 6 Breakevens
* 4 Losers
* 1 Winner
One of the things you said about your Entry Signal is that you trade the breakouts of Hammers.
I'm going to pretend that's one of my rules in my results.
However, all other trade management methods (initial stop/loss method and WRB Profit Target method) are via my own to see how the results would have been different especially since I know very little about your own trade management rules after entry.
Breakevens:
http://charts.dacharts.com/2005-09-16/hammers/breakeven/0913-rh.png
http://charts.dacharts.com/2005-09-16/hammers/breakeven/0914-gh.png
Not a sub-group I trade.
http://charts.dacharts.com/2005-09-16/hammers/losers/0915-rih.png
Losers:
http://charts.dacharts.com/2005-09-16/hammers/losers/0912-rh.png
Contingency Plan activated and reversed Long position that was a loser but hadn't hit its initial stop/loss into a profitable Short position that reached a big pt1.
That profitable Short position was bigger than the losing Long position.
http://charts.dacharts.com/2005-09-16/hammers/losers/0914-gh.png
Winners:
Reached a pt1
http://charts.dacharts.com/2005-09-16/hammers/breakeven/0912-gh.png
Reached a pt1
http://charts.dacharts.com/2005-09-16/hammers/breakeven/0912-gh2.png
Reached a pt1 and not a sub-group I trade
http://charts.dacharts.com/2005-09-16/hammers/breakeven/0912-gih.png
Reached a pt1 and a pt2 and not a sub-group I trade
http://charts.dacharts.com/2005-09-16/hammers/breakeven/0913-gh.png
Reached a pt1 and a pt2 and not a sub-group I trade...deciding factor for the winner is my initial stop/loss method.
http://charts.dacharts.com/2005-09-16/hammers/losers/0915-gih.png
Not a sub-group I trade but it did reach to big pt1 and big pt2 levels.
http://charts.dacharts.com/2005-09-16/hammers/winners/0914-rih.png
Here are the new results based upon Pattern Signals that includes my Hammer sub-groups, your Hammer sub-groups along with your breakout Entry Signal.
However, the trade management after the Entry Signal is based upon my own method since I know very little about yours after entry.
* 3 Breakevens
* 2 Losers
* 6 Winners
(Note: Technically there's 7 winners if you count the profitable Short position that was reversed out of a losing Long position.)
Two of the winners were big and another winner occurred as a contingency plan trade signal that was activated when that Long position was at a loss eventhough the Long position had not hit its initial stop/loss placement.
Conclusion: You may want to test the merits of using my WRB Profit Target method because some of your breakevens actually reached at least a pt1 level.
Another way to look at it...your trade management is poor.
It's a deciding factor in your results and my results.
However, if you did use a WRB Profit Target method...your doing something wrong.
Our difference in results is a good example of how trade managment can be a deciding factor into the failure or success of any strategy regardless if the strategy is based upon Japanese Candlesticks or upon some other strategy.
NihabaAshi
Yes...I would take the trade.
Yet, if it was in conflict with the bigger picture or I was confused about the market direction...
I either don't take the trade or reduce my position size.
However, that's not really what I'm talking about (key economic reports although its part of the big picture).
I'm saying is that Japanese Candlesticks should be used to support whatever is your primary method until you get to the point someday of making Japanese Candlesticks your primary methodology.
I've been trading Japanese Candlesticks for about 10 years and the first few years was a losing process.
However, it was never and still isn't my primary method.
Yet, it has been integrated nicely into my primary method.
PetaDollar has suggested S/R methodology.
I do know traders that have integrated Japanese Candlesticks and Pivot Point Analysis or S/R Analysis very nicely together.
The above is just one example of not having tunnel vision.
Another example is to only take trades in the direction of the overall trend.
My point...don't make Hammer Patterns nor any other Japanese Candlestick pattern the only thing while forgetting about the other things that can move the market or has a great impact on price movement.
Another example...
I remember getting a valid Bearish Dark Inverted Hammer signal about a minute after one of those Bin Laden rumor captures...
When those rumors first started after the U.S. enter Afghanistan.
I didn't Short...I went Long eventhough I didn't have a valid Long signal...
I just understood the nature of that rumor and its potential impact on the market and I profited from it.
Another example (soon after 911)...
I got a Bullish White Hammer pattern signal on the lower chart intervals while my higher chart intervals was bearish...
I reduced my position size by from 6 contracts to 1 contract.
Trade resulted in a breakeven trade.
Yet...I saved commissions on 5 contracts.
All the above just shows different variables to what can have impact on the markets and completely make a Hammer Pattern signal unimportant.
NihabaAshi
Lets take a closer look at your losers via your results.
http://charts.dacharts.com/2005-09-16/hammers/losers/0912-rh.png
There was no white line confirmation signal in the above price action in that first interval you call BreakOut.
In fact, that chart tells me you anticipated the Entry Signal via doing an early entry before the interval completed.
Alway....always...always wait for the interval to complete when it relates to your Pattern Signal or the confirmation signal.
If you don't...it could complete as a something different...something not valid.
That should make sense.
http://charts.dacharts.com/2005-09-16/hammers/losers/0914-gh.png
The above chart is a valid Bullish White Hammer I've been discussing in this thread.
The dark inverted hammer that appeared afterwards should be a warning that something isn't right with the price action.
However, that dark inverted hammer after a white hammer is not a sell signal.
It's just something that gives a warning to stay alert if the trade continues downwards towards your initial stop/loss protection.
Stay alert for any possible Short signals or trade reversal signals from a Long position to a Short position (contingency plans).
http://charts.dacharts.com/2005-09-16/hammers/losers/0915-gih.png
The chart above is a reminder about my mentioning several times in this thread that Inverted Hammers (dark or white) are dependent upon WRBs and that White Inverted Hammers have an additional dependent element...
The price action that occurs after the White Hammer Line.
In fact, Inverted Hammers have some sub-groups as bullish continuation signals and that diversity (bearish and bullish sub-groups) makes them the most difficult Hammer patterns to trade.
That should make sense and if it doesn't...
Don't continue trading Inverted Hammers that you don't understand its price action.
http://charts.dacharts.com/2005-09-16/hammers/losers/0915-rih.png
The above comments for the other Inverted Hammer chart can be applied to this particular Inverted Hammer chart.
As for those six breakeven trades/charts you posted...
It's simple...
Your letting too many trades that move in your favor...that move to either a pt1 or pt2...
Your letting them retrace back and take you out at breakeven.
This is a problem because in reality...breakeven trades are losing trades because of the commission cost puts that trade in the red.
The good news is that your moving your initial stop/loss placement into a breakeven trailing stop when price does move in your favor.
Regardless...the above comments is based upon my trade managment after entry and I can't really take a closer look at your own trade management rules other than to take some guesses at them via your chart examples.
Last of all, I'm going to give you a big hint about the one particular aspect of the big picture concerning trading Forex EurUsd or EuroFX EC...
Follow closely the U.S. Dollar Index (not the futures) and monitor its price action for additonal trade hints about EurUsd or EC.
NihabaAshi
I'm coming at the tail-end of this thread, but starting from the beginning.. so excuse me if I reply to some outdated posts.. also excuse the ignorance.. as I'm fairly new to the game--
NA, I am attaching your screenshot and highlighting what I think could be an inverted bearish hammer.. what do you think? I have read that you don't really trade them but I would like some insight..
Even if these are not true White inverted Bearish Hammers, to refresh, the rules are:
1) it's high > prior 3 highs
2) it's long upper shadow engulfs prior 2 bodies
3) it appears after one long white candle
4) it's body not greater than it's lower shadow
5) Open of White inverted Bearish Hammer >= close of #3 (the WRB indicator)
thanks--
NA, I am attaching your screenshot and highlighting what I think could be an inverted bearish hammer.. what do you think? I have read that you don't really trade them but I would like some insight..
Even if these are not true White inverted Bearish Hammers, to refresh, the rules are:
1) it's high > prior 3 highs
2) it's long upper shadow engulfs prior 2 bodies
3) it appears after one long white candle
4) it's body not greater than it's lower shadow
5) Open of White inverted Bearish Hammer >= close of #3 (the WRB indicator)
thanks--
NA,
Regarding the "Dark Inverted Hammer Line" -- I don't see a valid entry point -- If I've read correctly, you suggest after the pattern signal appears, the entry signal should be a "few" points into the shadow (retracement-direction) .. but there was no shadow in this case.. so how do you determine when to enter?
Regarding the "Dark Inverted Hammer Line" -- I don't see a valid entry point -- If I've read correctly, you suggest after the pattern signal appears, the entry signal should be a "few" points into the shadow (retracement-direction) .. but there was no shadow in this case.. so how do you determine when to enter?
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