Building an equity millipede

Look for vHandstrade in this forum (or you can Google as well). Its a free MT4 simulator for practising manual trading.

http://img718.imageshack.us/img718/7579/37027954.png

Mr Buy: Come on boys lets show these pansies
Mr Buy2: Oorah!
Mr Buy3: Push Push Push
Mr Buy4: Come on they running!

Hi Chorlton,

MT4 has a built in simulator called V-Hands. Do a search on Forexfactory and you'll find it. Also you could go to a 1 or 5 min chart and practise entries in real time on a demo account.

Morning Graeme,
To me a wick is where the bulls have overrun the bears or vice versa. The price has tried to rise but the selling pressure has become too great so it has fallen straight back down meaning the bulls/bears may have left the building?? This often seems to happen around s/r and could be a sign of price reversal or price continuing depending on context.
Regards,
Ben

It is also a sign of an indecisive market if both sides of the body

http://img819.imageshack.us/img819/1162/95847838.png

Mr Buy4: My mama calling me. Gotta go
Mr Buy3: Meh.. I had my fun. Toodles
Mr Sell: I take you on all by myself. Where are my boys?
Mr Buy: Uggh... We not moving anymore
Mr Sell: They are not winning anymore but its not moving. I cant push them back! I need more on my side.

http://img28.imageshack.us/img28/2176/61734549.png

Mr Buy: Im surprised to see we have more here but we are not moving much. Only tiny steps. Where is jimbo the big bone zumbo?
Mr Sell: I will hold on until my guys get here
Mr Buy2: Well we not moving much and its already dark outside. If we dont move quickly forward I gotta go home.
Mr Buy: Bah... Jimbo didnt come..
Mr Buy3: I have a confession to make.. Sometimes I wear Mrs Sell's underwear. Im really a Mr Sell.
Mr Buy: How could you change sides now?
Mr Buy4: Yeh, me too im shifting cause look Mr Sell2 and Mr Sell3 is coming.
Mr Sell: Heh Heh. My turn.. PUSH!

http://img51.imageshack.us/img51/6503/46466505.png

Mr Sell: HAHA. Where is your buys now? We going down down down. No retrace just smooth sail down.
Mr Buy: Nooooooo. Stop running away you pansies and help me push again
Mr Buy3: (now wearing Mrs sell's underwear) I dont care as long as Im on the winning side. So im pushing sell now.

**Graeme arrives on the scene**

Graeme: Hello. Mr Buy your struggling by yourself there. Good luck. Mr Buy you made it to 1.35000 metres but couldn't push it further anymore. Infact not even 33% retrace back and everyone on your side left.

**Graeme jumps on Mr Sell's back and chuckles**

Graeme: Hmm.. Why we not moving again?? Oh well I dont care, I just move my stop loss and move on. See you around boys

Mr Buy: Im going to get you Mr Sell
Mr Sell: No.

Once again they are not moving and then Jimbo the zumbo arrived wearing 'i love Mr Sell' t-shirt.

Mr Sell: hahaha. Down Down Down

http://img710.imageshack.us/img710/2894/49505924.png

Leggo you are correct.

Each candle is telling you a story.

Look at that candle. Very long wick at top but the price closed below the open.

This means, there was a huge push by buyers but they lost control when sellers pushed it back down and past the open price. This means for now the sellers are in control.

http://img269.imageshack.us/img269/4799/92289278.png

The next candle will continue on the story. There is small/medium push from buyers but you must notice that it stalled at open price of the first candle and bounced down. For the astute traders looking at this (which is 4hr chart) they will then will zoom into 5min chart and see the bounce happen at the open price of first candle and then enter with a very small stop loss above the open price of the first candle. Very small risk for a huge profit. Do you see it?

http://img269.imageshack.us/img269/4799/92289278.png

And it happens all the time. You can forecast the bounce near the open of the previous candle or near the high of the wick. You can enter with very small stop loss and aim for a large return

http://img69.imageshack.us/img69/8407/40163694.png

http://img299.imageshack.us/img299/4672/79481279.png

http://img843.imageshack.us/img843/5549/84483188.png

See how buyers try very hard to push it higher but fail around the same/similar price as before? Once you see it happening, zoom in to smaller timeframe

http://img199.imageshack.us/img199/9844/aa1q.png

Notice the huge push by buyers which fails and ends up closing lower than open price. See how the market reacts to this.

http://img838.imageshack.us/img838/1239/aa2.png

Welcome back sir .. thank you for your guidance ...
I've started practising your method since yesterday .. I just managed to deploy 11 positions with SL at BE in 12 currencies ...

I improved my entry with the golden rule that you taught "Long above Daily Open, short below Daily Open".

One question. How do u use the EMA to decide when to diversify .. ? Im planning to diversify when the price is between blue and red since it could be the turning point of the current trend.

Thank you sir.

http://img96.imageshack.us/img96/9784/aa1ib.png

We are focusing on long wicks. Long wicks is the first sign of weakness.

Look at first up candle. Hear its story. There was alot of buyers who pushed hard however sellers still managed to keep them under control and moved it back down creating that long wick.

We dont know what happens on next candle but when its forming I would watch price go back up to the tip of the high wick and 'bounce'

http://img175.imageshack.us/img175/4514/aa1a.png

Once I witness the bounce I will enter 'with flow' and place a hard stop loss above the high of the wick (make sure you leave space)

http://img826.imageshack.us/img826/3340/aa1f.png

Very small risk for something big. And it gets so much exciting when you allow this position to grow in line with the weekly/monthly trend

Wicks is the first sign of weakness. It shows traders leaving, and opposition entering.

Long wicks are sign of weakness.

http://img256.imageshack.us/img256/3140/aa1y.png

Look at the uptrend. Notice the last candle. A struggle between buyer and seller. Their powers are evenly matched. They are telling a story. Sellers had enough of being pushed around and started gathering power. But failed to make a close lower than open. Anyways, the fact that buyers couldnt close higher than open price + long upper wick is a sign of weakness from buyers. I would focus on the next candle happening.

http://img696.imageshack.us/img696/9981/aa1fb.png

Look at the bold down candle. Very short wick at top. No short wick at top means no buyers or buying power. Buyers are now leaving and sellers had enough and pushing it hard down.

I will enter on next candle but this time, there is no wicks to base entries. I could use the open price of the down candle and try and find a bounce. Bounce happens near open of previous candle, 50% fib, or tip of the high wick. Look around that area for bounce.

http://img22.imageshack.us/img22/7607/aa1e.png

Sometimes I enter at 50% fib if the hard stop loss I place above the previous candle is not too large and also on the looks of the current bold down candle.

It is disheartening to see many capable traders ignoring wicks. Wicks is the first sign before the formation of candle. Its how I have positions on wicks on daily candle and traders wonder how?

Pin bar. All traders agree pin bars are reliable indicators.

Its reliable cause of the long wick!

http://img228.imageshack.us/img228/5286/aa1o.png

There are many shapes/sizes and placements of pin bars. However pin bar is a story of epic tragedy. The last candle is a pin bar in my personal opinion. Some traders disagree because its too large to their taste. However look at the previous 3 up candles. The body of the pin bar almost comes back 50% of total distance/price moved and the wick is almost twice as long as the price actually moved. That is a legit pin bar. Or whatever traders would like to call it.

Its telling a story about group of buyers making slow steady small progress, and then alot of other buyers gathered force. But, unfortunately, sellers couldnt take it anymore and totally dominated their efforts in one single move and ended up closing lower than open. And to add further embarassment to buyers sellers came down to 50% with one candle which buyers did it in 3 candles. That is a huge amount of power that will not 'suddenly' vanish in the next candle.

http://img838.imageshack.us/img838/1583/aa1m.png

All other traders appreciate this remarkable push down and joined in. Candle after pin bar has small wick at top. What does it mean? Hardly any resistance from buyers.

The problem I dont like about pin bar is that most of the time the price move is so powerful I dont get a chance to witness a bounce near the open of the previous candle or top of the wick or 50% fib. I wouldnt enter by looking at this chart and place my stop loss at top of the pin bar, thats too much. However I now have inside information that at least for the next 4-8 hours it will be down. What do I do?

I zoom into smaller timeframe and use this inside information and stack positions aggressively.

http://img838.imageshack.us/img838/1583/aa1m.png

Lets continue on.

Uhh? Whats the last small candles at the bottom?

http://img31.imageshack.us/img31/1274/aa1j.png

Long down wicks??

What does it mean??

First sign of weakness for sellers

Its telling us another story. It means, sellers had enough fun and most are leaving the scene.

3 medium sized wicks 'bouncing' around the similar price. What does this tell you?

A very important message: Sellers cannot penetrate that area! They want to but not enough juice. What do you think it will happen?

Sellers will leave and become buyers and new buyers will jump into it at the sign of this weakness.

http://img807.imageshack.us/img807/7070/aa1.png

I can position myself ready to get in the action at 2nd/3rd bounce. I can use smaller timeframe when bounce happens and have a position on the wick and very small hard stop loss below the 3 wicks. Very small risk for something spectacular.

http://img31.imageshack.us/img31/9955/aa1hn.png

Lets now focus on last 4 candles.

I like the bold up candle. Sellers are leaving and new buyers are jumping on at the sign of 3 wick weakness before.

Uh... but..

2nd candle is inside bar.

Does everyone know the story of inside bar?

Inside bar is when buyers and sellers are not pushing anymore and both staring at each other. Just like western movies when there is a pistol duel. They are standing facing each other in the dusty desert waiting for one of them to draw their pistol first. Its that very climatic moment which is called a inside bar.

http://img196.imageshack.us/img196/1274/aa1j.png

Lets just say, I missed entering on the wicks before and ended up entering at inside bar candle. I wouldnt know it would be an inside candle cause I would have just entered at 50% fib and place my stop loss just below the open of the previous candle.

I would have suffered a drawdown but would have stayed in cause if price did breach/closed before the open of the previous candle, only then would I admit my defeat.

http://img814.imageshack.us/img814/4192/aa1l.png

Close call. Price did come back to open of the bold up candle but couldnt breach. Infact it 'bounced' and I was hoping such move. What do i do??

I would now zoom into smaller timeframe and use this inside information and enter well with the flow of bounce. I will have a postion on the wick.

Sellers tried hard twice to push it down to new lows but couldnt. Their power is diminishing for now and that merits another position from me.

USE THOSE WICKS

http://img251.imageshack.us/img251/8855/aa1el.png

We have just analysed/read the above. This is eur/usd 4hr chart. Each candle is 4 hours. Plenty of time/space for you to plan your pinpoint executions using the inside information here and then using that info in smaller timeframe.

I say this again, but it disheartens to see many many capable traders ignoring long wicks. This is first sign of exhaustion. If you are fighting someone professionally you need to look for signs of weakness; are they left/right handed, any repeating tell tale signs.

This weakness is the best place to attack.

The quality of decision is like the well-timed swoop of a falcon which enables it to strike and destroy its victim.
Sun Tzu

Most often than preferred, you will arrive too late in the scene if you wait for the close of the current candle. You need to be looking within the candle when its 'forming'

You must look for clear bounces and then enter with very small stop loss at next s/r area but sensibly and not too tight. (Just one of the methods and I will explain more methods like this tomorrow)

http://img46.imageshack.us/img46/8122/aa1x.png

All candles tell a story.

Look at that huge long candle. Looks like jimbo the zumbo has finally arrived for Mr Buy. Mr Buy, Mr Buy2, Mr Buy3 who is now back to wearing normal mens underwear and jimbo have gathered force.

uh...

Price stalled. It has barely made new higher price on the next candle. Price went just above the wick of the previous candle but then bounced. However not enough energy for remaining sellers to push the bounce any further down.

I wouldnt do anything at the moment. Perhaps I might have 1 position when I saw the bounce but I will do nothing more. My stop loss would be just above the wick.

3rd candle is inside bar. *whistles western tune* Both buy and sell gunmen staring at each other waiting for someone to move first.

Unfortunately the last candle would have stopped me out on a loss. It happens.

http://img638.imageshack.us/img638/5306/aa1d.png

Lets now focus what happened next. Price moved well below the range, this is a breakout! But i need to know for a fact that no smart buyers is going to jump in and surprise me. While the last candle is 'forming' I would notice price go above the previous wick and then 'bounce' down again but this bounce down would be more rigorous then before as it covers more move/range (there is momentum on this bounce!).

I truly love seeing wicks reach a certain 'area' or price and cannot penetrate and when they bounce back with momentum you can bet that I will be already on there with my tight stop loss at top of the wick.

http://img829.imageshack.us/img829/1274/aa1j.png

See how I arrive in the scene much earlier than most and have tighter stop loss than most and capture most profit.

Im scouting on 4hr timeframe using wick bounce.

I used this method for a long time and still use it often.

Sincerely,

Graeme

Graeme,

Quick topic-related question:

How many of the previous bars are important to take into account when analysing the current action? At what point do the previous bars become unimportant?