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Trade Naked Candlesticks strategy

  • Post #1
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  • First Post: Edited at 4:07pm Jul 19, 2006 3:57pm | Edited at 4:07pm
Hello,

Here's my strategy, I backtested for last two months and gave me good results:

- timeframe : 30 Min
- if two candlesticks have the same close (C), first is bullish, the second bearish, if the third is also bearish, I enter a short position when the forth opens
- if two candlesticks have the same C, first is bearish, the second is bullish, if the third is also bullish, I enter a long position when the forth opens.
- take profit 10, 20, 30 pips

Attention (filters):
- first one body must be bigger then 10-15 pips
- the third one body must be bigger then half of the first one body
- body 2 + body 3 > body 1


What do you think ?
Quoting cezz_ro
Hello,

Here's my strategy, I backtested for last two months and gave me good results:

- timeframe : 30 Min
- if two candlesticks have the same close (C), first is bullish, the second bearish, if the third is also bearish, I enter a short position when the forth opens
- if two candlesticks have the same C, first is bearish, the second is bullish, if the third is also bullish, I enter a long position when the forth opens.
- take profit 10, 20, 30 pips

Attention (filters):
- first one body must be bigger then 10-15 pips
- the third one body must be bigger then half of the first one body
- body 2 + body 3 > body 1


What do you think ?
OK...let's talk specifics:

1) When you say first and second bar have the same close, you do mean the EXACT same close, right?

2) How do you handle dojis (Open = Close) on the second bar?

3) Stop Losses? I didn't hear any mention of them.

4a) How many lots do you enter? I assume 3, or multiples of 3?

4b) If you do have multiple lots, do you move your second and third lots to break-even at your first take profit? Did you subsequently move your third lot to protect 10 pips at the second profit level?

5) What pair(s) did you trade/test?

6) When you back tested, did you account for the spread?

I can do a significant back-test (5 years or so, 1 year at a time), but I need to know the EXACT rules of the system.
Hi mrmikal. Let me briefly answer your questions:

1. EXACT close would be great. But by the same close I refer within 3-5 pips

2. If the second bar is Doji, I don't consider a valid signal.

3. I currently work on the SL, but for now I put SL on the Low of the second bar.

4. I currently demo this so I'm entering 1 lot. But if I'd enter more lots, I'd take profit with first at 10 pips and then move the other one to breakeven and the third to 10 pips like you said.

5.EUR/USD, GBP/USD

6. Yes.

If you could give this an extensive backtesting would be great. Let me know if there;s anything unclear.

Thanks.
Salut,

I asume that your second candle is not right next to your second candle because many times it would be a doji, you should have a gap to have that scenario. Can you put a picture for me/us?
What should be the distance between 1st candle and 2nd?
Am i missing something?
Try hard, think fast, die young
What u are trading is known as the morning star/evening star strategy.
It's been around for a while and is a good candlestick pattern for determining reversals even though it happens without reversals.
Quoting don perry
What u are trading is known as the morning star/evening star strategy.
It's been around for a while and is a good candlestick pattern for determining reversals even though it happens without reversals.
Well that's what i thought, but he said that the second candle can't be a doji, so?
Try hard, think fast, die young
My candlestick book (Profitable Candlestick Trading by Sephen Bigalow) says that what you are describing is a Meeting Lines formation.
Perhaps to make it easier for others to visualise what you are trading, go here:

http://www.litwick.com/glossary.html

and see if the formation you speak of is listed, if so then we can all see visually what it would look like. Otherwise of course a chart would help.
You can quit and they won't care, but you will always know.
Quoting gdf1953
My candlestick book (Profitable Candlestick Trading by Sephen Bigalow) says that what you are describing is a Meeting Lines formation.
http://www.litwick.com/indicators/1128.html

That's what I'm saying, you have to have a gap.
How many times does it happen in forex? I don't remember to see one. I admin I didn't looked for one, but still...
Try hard, think fast, die young
Well on anything above a 5M chart, very rarely, apart from the Monday open after a weekend gap. On a 30M timeframe I don't see them often, still if they are reliable.
You can quit and they won't care, but you will always know.
Like all candlestick formations, if you catch it bouncing off of a support/resistance then it's pretty reliable. As everyone should have heard, don't rely on just the candlestick formation. Back it up with something. I like a slow stochastic to show overbought/oversold along with the candlestick reversal pattern.

I looked at a few on a 15m chart that looked pretty good.
Hi there,

What were the pairs that you traded?
I was looking at the GBP/USD over the last week on a 15m chart.
Cezz,

Akuma is right, what you are proposing is virtually impossible unless you gap. Any gap would only occur on the weekend as prices rarely gap during the day, let alone gap and then return to the closing price of the previous day.

Think of it this way using the GBP/USD

First candle is bull 1.8250 to 1.8275
Second candle is bear ??? to 1.8275

The only way the second candle can be a BEAR and have the same close is if it gaps ABOVE 1.8275. However, since this is next to impossible unless there is some serious news going on, I don't see this being a feasible system to test.

Please explain where you have seen this. Showing us an example or showing us a chart would be great...
Quoting Akuma99
Perhaps to make it easier for others to visualise what you are trading, go here:

http://www.litwick.com/glossary.html

and see if the formation you speak of is listed, if so then we can all see visually what it would look like. Otherwise of course a chart would help.
Hey, Akuma. Your link is so useful for me. Thanks for sharing. I am learning candle now.
i am a beginner, so one pair is enough
  • Post #16
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  • Last Post: Jan 19, 2014 8:28pm Jan 19, 2014 8:28pm
it is nice to see this topic but sadly this thread is dead..... anybody would like to join me and revitalized this thread... naked trade with candle stick
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