Second thought using Mother Candles | Forex Factory

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Second thought using Mother Candles

  • #1
  • First Post: Dec 16, 2016 6:13am Dec 16, 2016 6:13am
Hi all,

I am starting this thread for in another thread we were talking about the use of a mother candle.
It was discussed over here in the Trade Made Simpel thread.

I looked up the info about what exactly a mother candle is and how to use it in decision making.
What I found was very interesting but I have one concern.

If you look at the image below it is suggested to place pending orders 5 pips below the low and 5 pips above the high of the mother candle.
If one is activated, one has to delete the other.
However, as you can see this means that everytime you would buy HIGH and sell LOW and this is a contra diction to what I learned to buy low and sell high.

So, I am a bit confused here. How would you handle a mother candle in your trading decisions? Am I missing something here?

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 175 KB
First comes knowledge about yourself, then comes a system...
  • #2
  • Dec 16, 2016 7:38am Dec 16, 2016 7:38am
Hi Jan,

It is a good idea that you are starting this thread on Master Candle and hopefully this thread will be a place where people can learn MC and also how to use in their trade decision.

As far I know, Master Candle is a chart pattern used to identify market consolidation and in the TMS, TDI is the main indicator used for trading decision. But TDI fails when market consolidates. So the rule is when we see a MC, we simply do not take trade based on signals TDI shows us. What we do when we see a MC? We use the MC high as resistance and low as support and go to lower time frame to look for TDI entry. The other way of trading MC is its breakout, i.e we take trades in the direction of the breakout with TDI confirmation. When trading breakout, often times we see false breakout so simply placing pending orders obove or below of high or low of MC is not a good strategy.

Hope it helps.

Okoso
  • #3
  • Dec 16, 2016 8:33am Dec 16, 2016 8:33am
Quoting okoso
Hi Jan, It is a good idea that you are starting this thread on Master Candle and hopefully this thread will be a place where people can learn MC and also how to use in their trade decision. As far I know, Master Candle is a chart pattern used to identify market consolidation and in the TMS, TDI is the main indicator used for trading decision. But TDI fails when market consolidates. So the rule is when we see a MC, we simply do not take trade based on signals TDI shows us. What we do when we see a MC? We use the MC high as resistance and low as support...
Hi Okoso,

Thanks a lot for your reply. This is valuable information for many to use It helps a lot.

Thank you again.

Jan
First comes knowledge about yourself, then comes a system...
  • #4
  • Dec 16, 2016 9:45am Dec 16, 2016 9:45am
Hi Jan, I take your point about buying high and selling low, however looking at your chart selling low would have made you money as the trend continued down. All depends if the trend continues, if it doesn't then selling low is not a good place to be if the market pulls back up. As for he TDI it's worth remembering that the TDI along with virtually every other indicator is a consequence of price which has already happened, nevertheless I do use the TDI
  • #5
  • Dec 16, 2016 7:37pm Dec 16, 2016 7:37pm
Good trading discussion here. As Okoso pointed out, MC's can either be traded as a range, or a breakout. The techniques are obviously quite different, but both work better switching to a lower TF.

Attached are documents on trading MC, as well as an indicator (actually an identifier) to assist in visualizing and alerting when MC are formed.

All the best,
N
Attached File(s)
File Type: mq4 Master_Candle_v2.mq4   5 KB | 1,269 downloads
File Type: pdf MC+Method.pdf   262 KB | 3,776 downloads
  • #6
  • Dec 16, 2016 9:50pm Dec 16, 2016 9:50pm
There are no magic candles.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #7
  • Dec 16, 2016 10:18pm Dec 16, 2016 10:18pm
Quoting TooSlow
There are no magic candles.
There are no magic candles, just like no magics opens.

Just trading within an established range, or deciding to take the range breakout. Similar to Billyt 4hr e/j breakout, wickzone break, or deadzone break.

A simple line in the sand...

All the best,
N.
  • #8
  • Dec 17, 2016 3:38am Dec 17, 2016 3:38am
Your on the right track looking at the candles.. Question I would have is did mother candle break S/R levels... then look to trade around the broken levels.

Now that your studying big candles,, take it to the next step.. Study consolidations, Study the "Stop" area's.. Study small grindy candles in one direction.

Then but it all together to read the market structure as a whole, not just one candle at a time.

Each type of price action tells you something!
The only system that will work is one designed by and for yourself.
  • #9
  • Dec 17, 2016 10:03am Dec 17, 2016 10:03am
Quoting Nik-Nyc
Good trading discussion here. As Okoso pointed out, MC's can either be traded as a range, or a breakout. The techniques are obviously quite different, but both work better switching to a lower TF. Attached are documents on trading MC, as well as an indicator (actually an identifier) to assist in visualizing and alerting when MC are formed. All the best, N {file} {image}

Thanks however, what are the rules about the wicks?

All the wicks in the ebook stay within the mastercandle, however that does not appear to show on the indicator you uploaded.

so should the wicks stay within the mastercandle completely or not? (or is it just the 'body')
  • #10
  • Dec 17, 2016 10:42am Dec 17, 2016 10:42am
Quoting Nik-Nyc
{quote} There are no magic candles, just like no magics opens. Just trading within an established range, or deciding to take the range breakout. Similar to Billyt 4hr e/j breakout, wickzone break, or deadzone break. A simple line in the sand... All the best, N.
No magic opens.
Only highest/lowest.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #11
  • Dec 17, 2016 11:15am Dec 17, 2016 11:15am
Quoting Nik-Nyc
Good trading discussion here. As Okoso pointed out, MC's can either be traded as a range, or a breakout. The techniques are obviously quite different, but both work better switching to a lower TF. Attached are documents on trading MC, as well as an indicator (actually an identifier) to assist in visualizing and alerting when MC are formed. All the best, N {file} {image}
I was away all day today. How nice to see this thread becomes alive Thank you all for participating.

Going to check also the files Nyc shared.

Have a great weekend all
First comes knowledge about yourself, then comes a system...
  • #12
  • Dec 17, 2016 6:20pm Dec 17, 2016 6:20pm
Quoting JanCeulemans
Hi all, I am starting this thread for in another thread we were talking about the use of a mother candle. It was discussed over here in the Trade Made Simpel thread. I looked up the info about what exactly a mother candle is and how to use it in decision making. What I found was very interesting but I have one concern. If you look at the image below it is suggested to place pending orders 5 pips below the low and 5 pips above the high of the mother candle. If one is activated,...
I haven't read the Trade Made Simple thread but I've gone through the master candle thread. Like all trading with candlesticks, you need to look at the location of the setup and make your decisions accordingly. You might also want to check that no major news is coming out, to avoid being whipped up and down.
Excellence is not an act but a habit.
  • #13
  • Dec 18, 2016 4:11pm Dec 18, 2016 4:11pm
No Mother. No Father. Orphan. True.

Now. No stop. Use LIMIT. Only.

Hard moneys with STOP.

Stop, no good. Limit - good.
Maadik Hugiis. IQ 69.
  • #14
  • Dec 18, 2016 4:17pm Dec 18, 2016 4:17pm
@Tooslow, Glad you agree.

@4undmanager, Indeed, location of candlesticks and/or signals is critical. However, for the purpose of tms, MC are really a warning sign for consolidation. Since Tms is a trend following system at heart, the MC's are basically a warning to ignore signals till price has cleared the consolidation range.

@Beslim. The Pdf attached does define the the child candles in their entirety, wicks and all. The default settings of the indicator on the other hand focuses on the "closing price" being within the MC. This setting can be changed by toggling the "ignore wicks" setting under inputs. Regarding actually trading these candles there are a vast number of ways to do that. One way is shown in the PDF attached. Another way is the use a multi-timeframe approach. For example, wait for a MC to be formed on h4, then wait for the first signal in m5/m15 you use, tms signal for example, above or below the MC hi/lo.

All the best,
N
  • #15
  • Last Post: Dec 21, 2016 5:57am Dec 21, 2016 5:57am
This strategy is a good element in my trading system. I like it, because it is simple, it do not requires a big knowledge about news, political or economic situation. It can be done on any time series of chart, but recommended on the 10 or 60 minute charts.
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