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I wanted to take a moment and share how I trade a double inside bar. The illustration on the attachment is a perfect example........I suffered a loss on this trade.....so this approach comes from personal experience.
So......two inside bars......equals consolidation.....wait for a break from the FIRST inside bar (the MOTHER) NOT the baby. Notice how the blue outside bar broke beyond the low of the second inside bar by 1 tick........I don't have to tell what happened....but I will......you just got had by the pros. Often a break from the second inside bar will work......but beware....that breakout could very well be a fake out.
There is one point that we agree on.....that is......anyone considering trading CL has to have the appropriate account size to give these trades the stops they need to work. This FACT can NOT be over emphasized.
NOW, this one is trickier than the inside bar and the outside bar because there is a little math involved AND volume is a consideration.
SO, here's the homework for the weekend. (only for those that are serious about these three trades)
Recognize that the reversal bar equates to four japanese candlestick formations.They are as follows: SHOOTING STAR......similiar to GRAVESTONE DOJI......AND.....HAMMER.....similiar to DRAGONFLY DOJI.
After you are done memorizing the descriptions and characteristics of these four candlesticks please note the similiarities.
The ONE common element is the size of the shadow.....most often described as "at least twice as big as the Real Body".....So....I had Roonius create an indicator that would identify all candles that exhibit this characteristic. That does not mean that they are all reversal bars but if we get these at the end of an up/down move there is a high probability that there will be a reversal.
I will share this indicator in the Elite downloads. It is entitled ReversalsV6.1 and it is for Ninja 6.5.
We can discuss the volume component to these trades later.
Yeah, it's really easy to write in Easylanguage and even easier in market delta. Should be slightly more difficult for ninja. Here is the easylanguage code:
This will depend on which charting package you are currently running and also you will need a data provider who supplies the correct data as most do not, one that does is DTN IQfeed.
Fat Tails showed me this thread. I've read thru it but I think my mind is tired so you'll have to forgive my dumb question.
Can you post a chart(s) showing an outside bar and a reversal bar? I saw plenty of examples of inside bars (the yellow ones) when I skimmed the thread but I don't think I saw charts showing the other 2.
Does anyone believe that the back test results from Strategy analyzer are reliable? mean, can the trades from backtest close to, if we did in real time data?
or is the sim trade in real time data or market replay better?
Probably the best way to see ALL of the bar types that this thread is concerned with (inside/outside/reversal) would be to load the Reversals V6.1 indicator on the 7-10 contract of CL (15 min) for the last 35 days and you will see days....of charts. The reason that the reversal bars have not appeared on any charts is that the indicator was just posted Fri afternoon. Remember that a tradeable reversal bar MUST come AFTER an up/down move.