[Help needed for newbie trader] A question on Indicators

[v555]

After noticing that this Forex section is full of Courses each advising of various Indicators, I am yet to come across a single indicator that can help in the following situation.

The picture here shows 15-minute charts of 2 stocks separated by the pink line. Left side is of one stock going bullish after the first candle of the day. Right side is of another stock going bearish after the first candle of the day.

My question is, is there one or more indicator(s) which can help to predict the direction of the second candle of the day after the long first candles in each of the above?

That is, how can one avoid going Short on the left side stock? And how can one avoid going Long on the right side stock?

Indicator like RSI is useless here, since prices can stay oversold/overbought for long periods of time. And indicator like MACD is useless too since it is lagging.

Although the picture is specific to the first candle of the day, obviously it applies during any time throughout a trading day.

Experts' suggestions and opinions are welcome; your answer will help all BBHF mates looking for similar answers.

(This question is on behalf of a friend; I am not into d-a-y trading currently - of course it can help me too if I get into day trading in the future.)

Thanks in advance.

[jackpinion]

First off? I would switch over to Heiken Ashi candles... They are actually INDICATORS in and of themselves. They do predict where price action is MOVING unlike regular candles.

Read this article...

Code:

https://tradingwithtrend.com/heiken-ashi-strategy

The other thing you can do is simply utilize some kind of a moving average CROSS. A moving average cross is also a leading indicator of price action.

In fact? If you use Heiken Ashi candles along with RSI with the standard configuration? Should be VERY EASY to see WHERE price is HEADED.

See attached image...



I don't normally use RSI that often but I do have a template set up with RSI on it. My template above utilizes what's called an RSI Cross. The RSI Period 1 is the usual 14 and the RSI Period 2 is 7. I then plot a line at 50 instead of the usual 70 and 30 or 80 and 20. Why? Because when utilizing the RSI like THIS? With this type of indicator (freely available online just perform a search in Google), I can see at each CROSS of the two RSI Periods, I'm getting (or CLOSE to GETTING) a new Heiken Ashi color change candle. When Heiken Ashi Candles change color, this is USUALLY a sign of the trend changing direction.

As you can see from the 8 zones I plotted out above on GPDUSD on the 15 minute chart? You could have easily made money here as well as predicted price action direction.

Having said that? I would have stayed away from Zone 2, Zone 6, and Zone 7 since they appear to be ranging. It's always BEST to stay away from RANGING or CONSOLIDATING price action until it breaks UPWARD or DOWNWARD. On the 15 minute chart, a wait like that should be EASY.

Now here's the same chart with a very simple 8 Linear Weighted Moving Average and 10 Linear Weighted Moving average.



As you can see from the above image, we now have 3 indicators PREDICTING PRICE ACTION DIRECTION. They all 3 CONFIRM each other.

As you can see from the 8 and 10 Linear Weighted Moving Average Cross in Zone 4? You could have ridden that BUY TRADE all the way UP to the Magenta color change Heiken Ashi Candle. That trade would have profited in 87 PIPS in 12 hours. Notice how the two moving averages do NOT cross on the way up? They IGNORE the color change candles on the way up because of the overall trend.

Of course? One could have just as easily gotten OUT of these trades at each color change Heiken Ashi candle and then jumped back in at the next color change UPWARD and still profited.

Hope this helped...

*EDIT: I also forgot to say that the 20 EMA is a VERY GOOD MOVING AVERAGE indicator when it comes to 15 Minute Charts. Trading it is extremely SIMPLE. Jump into a BUY TRADE when PRICE pierces UP through the 20 EMA. Exit when PRICE pierces DOWN through the 20 EMA. Just the opposite on SELL trades. Jump into a SELL TRADE when price pierces DOWN through the 20 EMA. Exit when PRICE pierces UP through the 20 EMA.



Good article on using the 20 EMA for trading on the 15 Minute Chart:

Code:

https://start-online-trading.com/best-moving-average-for-15-min-chart/

jack

[New Year]

Quote:My question is, is there one or more indicator(s) which can help to predict the direction of the second candle of the day after the long first candles in each of the above?

I don't think so, because you are trading in lower timeframes, and they change frequently, in higher timeframes you can follow the guidance of Elfranz, a late trader from Forum Factory with the Trade made simple thread
https://www.forexfactory.com/thread/2916...ade-simple

I think that TDI indicator AND The Heiken Ahsi candles can help you, trading is about possibilities and nobody can predict the future ... you can start using the TDI w/ Heiken bars, maybe creating another chart?, and counting how many bars on H4 (H1?) passed since the last retracement, and IF one or 2 passed, go to m15 and enter in the same direction than the H4 TF, maybe you need to wait a little to catch the H4 trend direction.. check what ElFranz said.........

Quote:Rille... I would have entered one candle earlier.

HA candles average a 3-8 candle run in most cases when it reverses... That's why I want to enter on candle 1 or 2 if I see a set up. A single candle on the 4hr nets you 30-60 pips or more generally. If it goes 3-4 candles you've already made 80-150 pips.

When using Japanese candles you see up down up down and your stressed to the max during your trade... It's more calming to trade HA candles.

Also...

Quote:The question was concerning why not enter on candle # 3. In this example the TDI indicates taking the trade on candle # 1. Had you entered on candle # 3 you would have been two candles late for the CORRECT ENTRY. Because a reversal normall runs 3-8 candles we were fortunate it has run so many candles...

The idea about entering on candle 1 or 2 if you get the TDI signal is if it only goes 3 candles you should get on average at least some profit... especially on higher time frames.

Remember, if you take the H4 (Or H1?) signal, go to M15 and enter in the higher timeframe direction... visit that thread, more than 5,000 pages, Good Luck...

[v555]

@jackpinion and @New Year :

Thanks a lot for providing your valuable opinions in an elaborate manner. They will be definitely useful for many newbies as a constant source of reference.

In fact you have provided independently working and profitable Systems for newbies to start with.

Thank You again.

====

Considering that the style and setup of trading differs much between traders, other experts' opinions too are welcome here. Of course, this call is only to complement the above strategies, not to replace them.

[lalala852741]

no indicators can "predict" price
PRICE IS KING
all indicators, which are lagging, are just derivative of price
you have to understand that uptrend is a series of higher lows and higher high
if price is going from lower left to upper right
conversely, downtrend is a series of lower lows and lower high
if price is going from upper left to lower right
and with that, you should trade the trend until it bends
or invalidates the series

[jackpinion]

(04-19-2021 01:55 PM)lalala852741 Wrote:  no indicators can "predict" price
PRICE IS KING
all indicators, which are lagging, are just derivative of price
you have to understand that uptrend is a series of higher lows and higher high
if price is going from lower left to upper right
conversely, downtrend is a series of lower lows and lower high
if price is going from upper left to lower right
and with that, you should trade the trend until it bends
or invalidates the series

True... No indicator can PREDICT actual PRICE but there are MANY INDICATORS that can and DO PREDICT where PRICE IS MOVING TOWARD. It's up the the trader to take advantage of those opportunities. Heiken Ashi candles are simple indicators that READ CURRENT PRICE ACTION and forecast future price by filtering out market noise that traditional candles include. Trend direction is easier to read. They allow you to RIDE the TREND for longer periods of time thus, increasing profits. Less prone to false breakouts and of course, my favorite reason for trading them... Bullish and Bearish candles alternate MUCH LESS FREQUENTLY than traditional candles.

Combine this with any one of a number of confirmation indicators and you can easily predict where price action is moving MOST of the time. No, not 100% but close enough to make a profit.

[v555]

@jackpinion :

While I thank you for your valuable inputs - they are indeed useful to the newbie - I think my original question is still not answered:

The picture depicts your setup using Heikin Ashi candles, how does one avoid taking a Short trade at the 2nd candle of the day ?

An obvious answer is to look for Horizontal SRs, but again, none seem to be consistent enough.

Thanks for sparing your valuable time.

[lalala852741]

how do you define consistent in your own words? like what %?
if you want to avoid losing, turn off your computer loljk
40-50% hit ratio with >2 edge ratio is already profitable

"there are MANY INDICATORS that can and DO PREDICT where PRICE IS MOVING TOWARD"
tell me an indicator that doesnt use price as a derivative/computation

[v555]

(04-19-2021 06:37 PM)lalala852741 Wrote:  how do you define consistent in your own words? like what %?
if you want to avoid losing, turn off your computer loljk
40-50% hit ratio with >2 edge ratio is already profitable

I define consistency in my own words as 99%+ .

You are entitled to laugh at this statement, as you talk of 40-50%; however, apart from the many traders mentioned in Market Wizards by Jack Schwager, I know for sure at least two traders who are attaining this, as I write this, as of this date. Both of them never use stop losses. [They are in Quora, but their method is very very specific to one country and one trading platform, and hence may not be useful to all.]

I do know their strategy, and I know that I too can attain their near-100% results if I follow their strategy exactly. Only thing is my personality is that I don't want to copy anyone ditto and I want to follow my own style in my current trading platform after doing my own due diligence.

Hence this thread.

Profitability is not an issue here, I am already profitable.

[jackpinion]

Not really sure I understand your question...

(04-19-2021 05:20 PM)v555 Wrote:  how does one avoid taking a Short trade at the 2nd candle of the day ?

But if I do understand your question... You could exit this trade as soon as the RSI BEGINS its move UPWARD. See the yellow line below:



As you can see from the image below, RSI begins its move UPWARD toward the 50 from both horizontal yellow lines. This indicates the previous move DOWNWARD is NOW waning or running out -- so you could easily exit by seeing this. Again, you're on the 15 minute chart so you're not going to lose a ton of pips by waiting to see this movement.



*EDIT: It also occurs to me that upon the CLOSE of the Heiken Ashi candle your image POINTS to, one could easily place a VERTICAL LINE from the platform you're trading on right down the middle of that candle and then immediately upon doing so, drop down to the 5 Minute or even 1 Minute Chart and observe price movement. With Heiken Ashi candles, if either one of those prints as a BULLISH candle? Exit the trade. If either one of those prints as a BEARISH candle... Stay in the trade unless the CLOSE is higher than the close of the MARKED CANDLE on the dropped down chart.