Analysis Of Charts

[robertbanking]

Hello you wonderful and intelligent people that make up this forum. I do hope you are doing well.

I have been learning alot about trading and looking at moving averages, volumes etc. I have conducted a few trades and made a profit. I tend to follow a checklist. I kindly wondered please what candles people look for i know some people can predict when the share is at a bottom and will start rising again. Does anyone know what software i can use to detect these certain candles and what do they look like please?

Thank you again for any support you can give, i would truly appreciate it. I do hope you are having a great start to the week. Many thanks for your support.

 

[robertbanking]

Hello i do hope you are doing well. If anyone kindly had any thoughts on the above, even if its only a few sentences i would be forever grateful and thankful. I do hope you are happy and healthy, thank you very much.

 

[Mumpsimus]

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[tomorton]

Trying to pick reversal points is a sure way towards wiping out your account. And precise candlestick patterns won't help.

What can be relied on with some positive probability is that price in a pull-back from a trend will more often than not revert back into the trend. But you don't need to pick the precise reversal price or point in time: all you need to do is see the pull-back and then set an entry order between where price pulled back to and the trend. If the trend resumes your order will ne triggered. If the trend does not resume your order will not be triggered and you have lost nothing.

 

[robertbanking]

Thank you very much tomorton for your support i truly appreciate your time replying. I think that is wonderful advice, i was so obsessed with reading about candlestick patterns and needed some further advice.

Do you have any examples you could provide please such as stocks, that have seen this kind of pull-back from a trend or any images, just to please help clarify this for me? Further or any further information that could please be useful?

Thank you so much for your time tomorton, i honestly cannot thank you enough for your advice. Sometimes i get stuck in my own thought patterns and just need a bit of guidance. So thank you very much and hope you are having a nice day so far.

 

[tomorton]

Thank you very much tomorton for your support i truly appreciate your time replying. I think that is wonderful advice, i was so obsessed with reading about candlestick patterns and needed some further advice.

Do you have any examples you could provide please such as stocks, that have seen this kind of pull-back from a trend or any images, just to please help clarify this for me? Further or any further information that could please be useful?

Thank you so much for your time tomorton, i honestly cannot thank you enough for your advice. Sometimes i get stuck in my own thought patterns and just need a bit of guidance. So thank you very much and hope you are having a nice day so far.

Sure.
I notice you posted a few weeks ago on Zim Integrated Shipping so here's a little analysis on ZIM from one trend-following point of view.

Most of the chart's short history has been bullish but looking just at 2022. There was a beautiful opportunity in mid-January. On 18/01 price had printed a new daily all-time high but closed low from the open, in the lower half of the day's range, below the two preceding closes and forming a shooting-star candlestick. All bearish signals, though price still remained above both the 20 and 50EMA's and the 20 remained above the 50. All of price, 20 and 50EMA's are also well above the 200EMA (though with a price history this short, the 200EMA is not a fabulous guide). Anyway, the uptrend remains intact so a buying opportunity is occurring, not a shorting opportunity.

On 19/01 an entry tactic would have been to set a buy order just above that day's range with a stop-loss just below its low. That order would not have been triggered on the 20th so could have been lowered to the high of the 20th and the SL adjusted to that date's low. Actually the lowered buy orders for 20/01 and 21/01 would not have been triggered but the order lowered down to the high of 24/01 would have been triggered on 25/01. This would have been a valid long entry as the uptrend remained intact referencing price to the 20, 50 and 200EMA's and the MA's to each other, plus the fact that price had still closed above the previous significant swing low of 05/01. Price then rose consistently for the next 12 days, with an opportunity to hold on until the all-time high in mid-March, a potential gain of just over 50% on the entry price, a potential r:r of 1:6.

Its simple stuff really, I didn't invent the wheel. I hope its all clear but post up any queries.

 

[robertbanking]

Thank you very much indeed tomorton for taking the time to reply in so much detail. You are an amazing person. This has been so helpful. It has been really clear for me to see the trade with your examples. I am very grateful for taking the time to reply.

I followed everything you said, i understand that Zim on 18/01 had printed a new daily all-time high but closed low from the open, below the two preceding closes forming a shooting-star candlestick. I am sorry to ask again but i struggle to follow the setup when your buy order was not triggered on the 20th. I understand from the Zim chart the 25th would have been a perfect buying opportunity for the upward pull. Can you kindly share some further insight on what your buying price and stop losses would be and how they change so this is triggered on the 25th? Sorry to ask but this would be so kind of you if you could help with this, i would be forever grateful.

Thank you again for your support tomorton it means everything to me. I do hope you and your family are doing well and thanks again for your support.

 

[robertbanking]

Very sorry to follow-up tomorton i really hope you are doing well and are staying happy. Thank you so much for your previous response it was amazingly helpful.

I just wanted to kindly ask if you had any thoughts on the questions above please? Further what screener do you kindly use to find these shooting-star candlesticks with shares printing a new daily all-time high but closing low from the open, below the two preceding closes please? Can i kindly ask what filters you set or how you go about finding these stocks to trade?

Thank you so much for your support you have been amazing and are a wonderful person. I do hope you can kindly leave me a short reply when you please get a moment. I wish you a super and happy weekend and thanks again for your time.

 

[tomorton]

Sorry robertbanking, I missed your post.

Anyway, on the 18th price printed a new high but the set-up arose the next day when it printed a lower high on the19th. After the close on the 19th, you would set a buy order just above that day's high and a SL just below that day's low. As the buy was not triggered on the 20th, after the close on the 20th you would lower the buy order to just above the high of the 20th, and also lower the SL to just below the low of the 20th. The buy can be lowered again and again as long as the uptrend remains strong. The SL is lowered each day also but as the entry-to-SL distance is different each day, you also need to adjust position size each time you move these two orders.

The buy that would finally be triggered would be the order set just above the high of the 24th, with a SL just below the low of the 24th.

Actually I don't trade stocks, only forex (occasionally stock indices), but the exact same method works on all markets. It takes a few minutes each night to check the leading 28 forex pair charts and set or adjust orders accordingly. everything benefits from a bit of practice on a demo account.

I hope this helps.

 

[robertbanking]

Thank you so much Tomorton that makes perfect sense and i really cannot thank you enough for your help. I have been reading books and over complicating things in my mind. Then watching videos on the subject. However you made it really easy to understand and looking at the charts of Zim integrated Shipping i was able to piece it together.

Just lastly can i please kindly ask what percentage above the days high you would use for your buy order after the close on the 19th and what percentage for the stop loss below the days low please? For instance 5% above the days high on the 19th for instance? Further in terms of finding stocks to trade, would you just review charts over a 6 month period or is there any specific screening software you can use to find these setups or checking certain volumes of trades etc please?

I really cannot thank you enough for your support, sending you many good wishes your way. You have been a pleasure to talk to and your advice is amazing. I really need to start practising this setup on a demo account as you mentioned. Hope you are having a pleasant weekend.

 

[tomorton]

The margin for error between a chart price and the entry order price based on that chart is a matter for some personal judgement - an order close to the price level will more often lead to a loss - but how much more often will depend on the market and the current market environment - and how much the loss means is relative to the individual trader. An order further out is less likely to be a "trap".

I trade forex and indices so can be quite tight with these margins for error, as volumes are huge, so I usually just allow for spread when setting a buy order and eye-ball it. However, you could always use an objective measure which responds to stock volume and market conditions, and base your margin for error on a fraction or multiple of current ATR.

On balance, I would go every time for a late entry due to generous margin for error - better than an early entry that is soon found to be in a direction reversal.

If I was checking stocks for targets I would make sure the indices are all bullish (I only go long on stocks), I would look for mid-caps and TMT's as they generally move faster than the mega-companies and utilities, then check for which sector is rising most consistently over time and across the membership. I've never even looked at volume. After that its possibly wasted effort to find the absolute best target, so a scatter-gun approach with initial entries would be more my style, and let the market sort them out.

 

[Resolve]

The margin for error between a chart price and the entry order price based on that chart is a matter for some personal judgement - an order close to the price level will more often lead to a loss - but how much more often will depend on the market and the current market environment - and how much the loss means is relative to the individual trader. An order further out is less likely to be a "trap".

I trade forex and indices so can be quite tight with these margins for error, as volumes are huge, so I usually just allow for spread when setting a buy order and eye-ball it. However, you could always use an objective measure which responds to stock volume and market conditions, and base your margin for error on a fraction or multiple of current ATR.

On balance, I would go every time for a late entry due to generous margin for error - better than an early entry that is soon found to be in a direction reversal.

If I was checking stocks for targets I would make sure the indices are all bullish (I only go long on stocks), I would look for mid-caps and TMT's as they generally move faster than the mega-companies and utilities, then check for which sector is rising most consistently over time and across the membership. I've never even looked at volume. After that its possibly wasted effort to find the absolute best target, so a scatter-gun approach with initial entries would be more my style, and let the market sort them out.

We need to understand how the charts will work so that the income we are getting can be increased.

 

[robertbanking]

Thank you very much tomorton you have been amazing, i cannot thank you enough for your time. You are truly a wonderful human being.

Can i kindly ask please as a rough estimate what you would set the margin of error at in a percentage form for the price above the days high and stop loss below the days low please? I understand mid-cap and TMT's generally move faster i appreciate this advice. Do you kindly use any software or anything else please to help you find these setups?

Thanks again for your time and for sharing your amazing intelligence. Hope you have an amazing week.

 

[tomorton]

I don't have any specific methodology on the margin of error but in principle I am drawn to agree there should be an objective way of doing it. Again, you could use a fraction of current ATR., whereas I tend to eyeball it. You could even apply an adjustment for targets which have a lower probability according to your TA, so they need to show greater momentum before your current entry order got triggered.