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Questions for real pros: How to trade with reference points only?

  • #121
  • Edited 9:11am Sep 18, 2024 8:59am | Edited 9:11am
Quoting AntiCre
{quote} Dear Fiox89, thanks a lot for your input! Yes, had the same idea. However, (and I hope I won't disappoint you) the brutal truth is that regardless of your entry criteria, you'll always encounter a 50/50 chance to get a target or take a loss first if you're using a 1:1 RR.
Hi AntiCre. I don't know if you are still interested in the topic, I hope you are still successfully using all of this.
I came back here after related searches and I was wondering: based on the data you have collected, if I buy just for simplicity at the candle close price can we assume that, statistically, the best SL point is in the minimum reached around the moment 0.249 x TF and the best TP point is in the maximum reached around the moment 0.749 x TF?

Edit: to complete the thought, even if I am on the right side of the market only 50% of the time, my SL will be closer than my TP, since the average range of the candle manifests itself throughout the duration of the candle (?) and this seems to give me an apparent edge.
  • #122
  • Sep 18, 2024 12:15pm Sep 18, 2024 12:15pm
I am currently on a sell trade on gbpjpy. I am new to trading. please what is the possibility of US Fed rate cut affecting my non-US pair trade
  • #123
  • Sep 18, 2024 12:47pm Sep 18, 2024 12:47pm
Dear Fiox89,

Quoting Fiox89
{quote} Hi AntiCre. I don't know if you are still interested in the topic, I hope you are still successfully using all of this. I came back here after related searches and I was wondering: based on the data you have collected, if I buy just for simplicity at the candle close price can we assume that, statistically, the best SL point is in the minimum reached around the moment 0.249 x TF and the best TP point is in the maximum reached around the moment 0.749 x TF? Edit: to complete the thought, even if I am on the right side of the market only 50%...
I haven't really tested it but it sounds good to me. Personally, I indeed think this is where an edge can be found. And you can see this edge even in another post. In the image of the 2nd row, the one with green dots, you can find that the probability for going long is around your 0.249 of the whole TF. Congrats!

(Important note: I'm not the best trader here and not the one with long experience in being profitable! There will be other perceptions of the market. I'm not and I won't be a guru!)
However, I only considered this for entries. But yes, basically it imo also plays an important part in exits.

Nevertheless, how would you trade it? Maybe thinking along CrucialPoint's (or better, Neio's) lines may help: If you can only enter once in the lifetime of 1 single candlestick and you'd be allowed to exit whenever you want (even if the entry candlestick is dead), how would you trade it? I think it's not enough to only look at one measure of that candlestick. You need imo 2 (but I guess you already know this). You can easily design 2 measures of that candlestick, But before you do so, you have to define a few things:

  1. Personally I'm creating a new candlestick with every new incoming tick. If you use candlesticks of length x on tick base, you won't be biased by different market activities (that you'd be if you use common candlesticks).
  2. The first measure of the candlestick is too obvious. How do you know how 1 candlestick performs? Easy: You look at it's color which is determined by the open-to-close difference.
  3. However, even if you have an extraordinary long body in a bullish candlestick, you probbaly won't hold if you'd have entered and are now in a profitable trade, if the price retraces too strong. The question is: How can you continuously measure that retracement strength? Yes, the difference of the close to the high would be an obvious answer. But as you can see in the average performances of bullish candlesticks, the high doesn't need to be the last extremum that's been hit by price in a bullish candlestick. So, which parameters of an (average) candlestick do you need to know to design a good measure for the retracement strength?

It may help to know how candlesticks perform and how their appearance is shaped during trends (for instance, see here). This may help you to see why measure comparisons with an average candlestick may help you.

Once you've got good candidates for 2 measures, you will also know which kind of trends you want to trade. The edge will only appear if your still evolving candlestick turns out to be either bullish (for long trades) or bearish (for short trades). Thus, you need to track the development of the candlestick to know when to exit the trade. And this can only be accomplished if you know how the two measures perform together (i.e. how you need to interpret the position of the retracement measure if the trend measure is at x, y, or z.

Looking forward to see your progress!
AC's out

  • #124
  • Sep 19, 2024 4:48am Sep 19, 2024 4:48am
Quoting AntiCre
The question is: How can you continuously measure that retracement strength? Yes, the difference of the close to the high would be an obvious answer. But as you can see in the average performances of bullish candlesticks, the high doesn't need to be the last extremum that's been hit by price in a bullish candlestick. So, which parameters of an (average) candlestick do you need to know to design a good measure for the retracement strength?
Thanks AntiCre, another thought-provoking post.

I can understand why you consider this approach only for entries, and I agree with you. I also understand that there is a precise point where entries make more sense, if I have to open a new position I want to be at the statistically most extreme point, to maintain a minimum SL and maximize the TP.

Using tick-based candlesticks helps maintain more granularity, it makes perfect sense. A rolling candlestick seems like a practical way, I will definitely start experimenting with this concept.

To measure the retracement strength, based on what you have reported here, I can assume that when the range of a candle (in the opposite direction) exceeds a certain threshold, this can give me an indication of the weakness of the trend.

Also, how long the price stays below the opening line is another value that I would take into account, and this is probably related to that of the midpoint of the rolling candle.

However, I am still missing something.. and further study is needed
  • #125
  • Jul 7, 2025 6:36am Jul 7, 2025 6:36am
Quoting Oliver.Twist
{quote} {quote} You are wrong in a few ways with this sentence alone. First, in the idea that you can't pick a chart that is trending. You make it sound like it's difficult or something. It comes more easily with years of chart time of course, but if done correctly, then no the markets won't prove you wrong more times then not. If you can't easily tell the difference when an instrument is trending cleanly, vs one that has unstructured price action, then that is your first problem to solve. Second, one thing you miss to point out, is that when you...
Bro i need a trading pod are you in?
im an obsessive learner from lance, his content is second to none in trading industry. we can collaborate for a better trading career.
  • #126
  • Nov 9, 2025 11:00am Nov 9, 2025 11:00am
Quoting Ulfasar
{quote} Bro i need a trading pod are you in? im an obsessive learner from lance, his content is second to none in trading industry. we can collaborate for a better trading career.
Hi, sorry just saw your post. What did you have in mind?
  • #127
  • Last Post: Nov 9, 2025 11:44am Nov 9, 2025 11:44am
Quoting Oliver.Twist
As soon as I read about using a "reference point", I immediately thought "oh boy, someone is going to mention CrucialPoint"...
Quoting Oliver.Twist
{quote} " Why do you think looking at more data is better" I think there's a sweet spot to find, which is specific to the trader, as to how much data is needed...
I was just re-reading some posts in this thread, and I quote myself here because if there's one thing that's been consistent in how I view the markets over the years, it's this basic concept: Market selection is everything. Deciding what (& when) to trade is the heavy lifting that is crucial to putting the odds in your favor. As I previously explained, once that is done, it's actually irrelevant what method you use to get your signal to enter a trade. I also quoted Lance in one of my replies, and he focuses on stock selection, but the same reasoning absolutely applies to forex & indices.

When I posted some screenshots 2 years ago, I used very simple "filter" methods similar to what Qullamaggie uses, which are just a few MAs. It's a proven method, and it's hard to get more basic than that, yet that's all that is needed to form an edge. Which goes back to my initial response to this thread: There's no need to re-invent the wheel, or to chase some mystical quantum method to the markets. Market selection already puts you ahead if done with common sense.

Here are 2 recent markets, I think it's fairly easy to chose between the 2 which one to focus on for the current day / week / whatever your TF is.

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