steve nison’s candlesticks re-ignited advanced workshop ... · 2 steve nison’s candlesticks...

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Steve Nisons Candlesticks Re-Ignited Advanced Workshop:Advanced Western and Trade Management with Candlesticks

Volume 4 of the Nison Educational Series

www.candlecharts.com

AdvancedWestern

Technical Tools

Founder and President: Candlecharts.com 212

CandlestickCharting

Techniques

WesternCharting

Tools

Trade Management

213

214

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2

Enhance winning %s

Using candles fornew trade

Price targets

Western Technicals

215

A candle signal is normally not asufficient reason for a new trade

216


East + West Confirmation

Where a candle

signal confirms a

Western technical

signal

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3




East + West = Greater Winning %

218


Candles plus..

219


Candles plus Bollinger Bands

220

4




Convergence of Clues

Open Interest

221


East and West = Higher Confidence

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Candles look good- but what about m.a?

223

5




Crack and Snap with Volume

The arrow points to a Snap and Crack. Whatdoes volume do to increase the likelihood of thistechnique working?

224

www.candlecharts.comFounder and President: Candlecharts.com 225

www.candlecharts.com 226

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Candles and the ADX:The Perfect Fit

Candles and the ADX:The Perfect Fit

227


Stands for Average Directional Indicator

Shows how strongly a market is trending

Does not show direction of trend

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Strong ADX withprices in up trend. Strong ADX with

prices in down trend.

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Some technical indicators, such as moving averages,momentum trading, work better in strongly trendingmarkets.

Some technical indicators, such as oscillators, workbetter in non trending markets.

Traders check ADX to see if the technical indicatorthey use is in right trend environment

231


Use only on daily charts except for FX

Use only for entries

Lagging indicator

Slow to recognize a new trend

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Steve-

Apple has recently gone from 120 to 150 and the ADX on a daily basis

has not moved up. This is surprising. Comments? - Pete

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Common mistake- lookingat ADX level.

Slope is the key

Slope=change in ADX fromyesterday to today.(todays ADX level-yesterdaysADX level)

Greater the slope, strongerthe trend

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-.31

ADX at 20.64.What do we need todetermine the slopeon this day?

ADX at 20.96

Slope = 20.64-20.96 = -.32

ADX 22.04

ADX 24.11

Slope = 24.11-22.04 =+2.07

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14 PeriodADX slopeincreasing.5 or more

ADX:22.38

ADX:20.30

ADX:26.03

Slope = +2.08

What is the slope?Strong uptrend?

ADX:27.56

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Minimum:14 PeriodADX slope+.25 orless

ADX:18.57

ADX:18.26

-.31

Strict: 14PeriodADX slopedecreasing

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[email protected]

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Candles and ADX - The Perfect Fit

Reversal candleshelp pick top andbottoms.

Increase % by notgoing againststrong trends.

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Do we have to measure theADX slope on this hammer?

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Minimum:14 PeriodADX slope.25 or less


-.10-.40

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Bull shadows on descent. Butbased on ADX which of these ismore likely a turn?

ADX slopes2.24, 2.53, 2.67

Why didnt Iput ADXnumbers forthese?

243


ADX : 27.98

What candle patterns are atthe dashed arrows?

What is the ADX telling us?

ADX : 30.38

ADX : 31.80

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ADX:18.57

ADX:18.26

-.31


+.95


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Slope +.97

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FOR BEAR CANDLEREVERSAL SIGNALS

Step 1 get candlesignal

Step 2 ADX showsuptrend easing orno trend:

ADX slopeincreases byless than .25,and better ifslope isnegative

ADX:42.85and 41.02so slope is-1.83

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FOR BULL CANDLEREVERSAL SIGNALS

Step 1 get candlesignal

Step 2 ADX showsdowntrend easing or notrend:

ADX slope increasesby less than .25, andbetter if slope isnegative

ADX:1-31.972-32.673-32.484-32.455-32.536-30.23

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2

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5

6

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Gravestone doji at resistance

After the gravestonewhere is a potentialtarget?

250

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Candles for reversals and Western for targets

Bearish engulfingpattern at top of bullchannel

target

251


Firstleg

target

Swing TargetSwing Target

252


East and West

Doji as signal to exit

253

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Becoming a Confident Trader

254


Head and ShouldersHead and Shoulders

Neckline

Left ShoulderRightShoulder

Head

Head and Shoulders Top

Sellsignal

255

Three Buddha Pattern

256

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We got the reversal here withcandles .

Compared to here witha classic western signal

Why we are here!

257


1

2 3

Old supportbecomes..

New resistance

How Education Saves You $$$$

1- Bear Harami2- Dark Cloud Cover3- Bearish Engulfing Pattern

258

neckline Interview

Head andShoulder top

TASC Interview - Jan. 24, 2003 S&P at 860

the heads and shoulders top on theS&P gives a target to near 775. A closeover 870 would void this. Hammer

1) Once the necklinessupport is broken, itshould becomeresistance.

2) To get a target with thehead and shoulders topwe measure from the topof the head to theneckline.

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STEVES FAVORITEMEASURING TACTIC

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Box Range BreakoutBox Range Breakout

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Box range breakout

Harami withtarget bottom ofbox

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Box range Breakouts

263


East & West = Profits

264


Box range Breakout/ momentum trading

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Scenario1

Scenario2

The Tools of the West withthe Light of the Candles

The Tools of the West withthe Light of the Candles

267


The Nison Candlestick ScreenerThe Nison Candlestick Screener

Using candles at support or resistancefor the high probability trades

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Question 1- Is the market at support or resistance?

Question 2- Are there any reversal candles?

Question 1- Is the market at support or resistance?

Question 2- Are there any reversal candles?

Two simple questionsTwo simple questions

The Nison Candlestick Screener

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1) Whos in control duringthis ascent?

2) What is thiscandle linehinting?


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Major resistance 2.00-2.01


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Long term resistance zone

1) Is the at resistance?

2) Are there any candle signalsshowing hesitation?

How education saves you $$$$

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The Value of Owning the Knowledge

Long term resistancezone

275


The Value of Owning the Knowledge

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Near support?Any reversal signals yet?


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Market refreshed


Near resistance?Any reversal signals yet?

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Using Measured Moves including:

Box range

Head and Shoulders

Swing Targets

The Candlestick Screener

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What are Sectors?

Technically analyze sectors like any other market

Cant trade sectors so why are sectors important to traders?

283

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Candles and Sectors

284


Why are Sectors important

Sectors account for 37-60%of an individual stocks performance

This means you need to know what the sector is doing!285


Bottom Up: Stock to Sector

Top Down : Sector to Stocks

Bottom Up: Stock to Sector

Top Down : Sector to Stocks

How can we use Sectors?

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Check the stocks sector

Try to place new trades in direction of sector outlook

If must go counter trend to sector, use to take profits

Check the stocks sector

Try to place new trades in direction of sector outlook

If must go counter trend to sector, use to take profits

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AMGN - Aug 17 Biotech Sector- Aug 17

Although fallingwindow what is its sectorstrongly hinting?

Bottom Up Sector Analysis

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Biotech Sector

AMGN Sept. 11Buy ?


291


Sept.11

Buy


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Setting up scanning pages forNison Sector Analyses

294


Scanning with Nison Candle Sector Analyses

STEP 1 Scan Sectors

Aug. 16

Internets Banks Biotech

Gold- Silver Semis Retail

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STEP 2 Scan Component Stocks in Chosen Sector(s): Internets for this example

Aug. 16

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STEP 3 Do Analysis on Stock for Potential Trade

Aug. 16

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Aug. 16

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ETFs

Track All Major Sectors and Indices Track All Major Sectors and Indices

Can Trade ETFs Can Trade ETFs

Popularity/Liquidity Popularity/Liquidity

Exchange Traded FundsExchange Traded Funds

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Golden and Dead Crosses

Dark cloud confirming resistance

Hammers

Bull sashpatterns

Analyze and Trade ETFs like any other market

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Windows and ETFs

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Sectors Important for stocks

Can analyze with candles

Bottom up trading

Top down to filter Scan for best sectors

Find best stocks in those sectors

Analyze those stocks

ETFs Ability to trade sectors

Instant diversification

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3

Market Chameleon

Candles in Context

Risk-reward

Exit Strategies

Trade Management

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Being a Market Chameleon:As market conditions change,

adjust your market stance.

Adapting to the Market

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Looks good

anythingdifferent?

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Target

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Sell here

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Adapting to the market

Wheressupport?

Wheressupportnow?

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Become a Market Chameleon

BearStearnsCollapse

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Candles in Context

Analyzing candlesignals within thecontext ofsurroundingtechnical picture

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Misinformation can cost you $$$

?

314


Same Signal- but how different the strategy!

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Which is a Bettertrading signal?

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Dark Cloud Cover

BearishEngulfingPattern

Candles in Context

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Which is a bettertrading signal?

Hammer Morning Star318


Hammer

Morning Star

Candles in Context

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1. What is your price risk?

2. What is your target?

Do you have agood

risk-reward?

Always Check Risk Reward

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Risk/Reward

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Waiting for time to ripenClassic bearishengulfing pattern:But what aboutrisk/reward aspect?

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Trade Management Essentials Adapting to the Market

Candles in Context

Importance of risk/reward

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Founder and President: Candlecharts.com 324


Protectingyour Assets

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Slide 115

The race is not always to theswiftest, but to those who keeprunning.

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Protective Stops keep you in the game!

Lookspromising at

the whitecandles

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Hammer

Closed under support

How Education Saves you $$$$

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Hammer

How Education Saves you $$$$

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Exit Strategies

Protective Stops

Time Stops

Trailing Stops

Steve Nisons Candlecharts.com 331

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If the market does not actas expected within aboutfive sessions then considerexiting

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Dont Stay Around

Hammer and Bull Engulf

What are you doing hangingaround! Youre wastingprecious resources.

Chart courtesy of Genesis FT

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Youre Wasting Resources

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Trailing Stops

As the market movesin your direction stop is adjusted tohelp ride the trend.

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Golden and Dead CrossesCompares two moving averages

GOLDEN CROSS: shorter crosses above longer DEAD CROSS: shorter crosses under longer

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Answer: 3 and 12 day

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Trailing stops - letting the profits run

Fallingwindow

I usually exit, itcorrects somewhatbut then continuesto go in the originaldirection after that.

ShootingStar

You sold at shooting star orfalling window. A rally from abull harami gets you nervousand you exit. But youre still

playing with the marketsmoney- so another option:

trailing stop.

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Falling window

ShootingStar

Where you got nervous

Trailing stops - letting the profits run

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Letting Profits Run

Buy and setprotective stop

Shooting star

Could take someor all profits here

Or use dead crossas your trailingstop and wouldthus exit here

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Trailing Stops to let profits run

Buy and setprotective stop

Potential Target

Now at target-Doji warns of

caution. But youwant to letprofits run.

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Trailing Stops to let profits run

doji

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Exit Strategies

Protective Stops

Time Stops

Trailing Stops

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Trading Journal(setting up the Trade)

Goal: Keeping emotionsout of your trading

Date, market, $ amount committed Why did you do the trade Entry Price Risk Initial Target Exit Price Analyze Trade

Print out (or cut and paste) chart and make notesWhat did you do right/wrong

Date, market, $ amount committed Why did you do the trade Entry Price Risk Initial Target Exit Price Analyze Trade

Print out (or cut and paste) chart and make notesWhat did you do right/wrong

From Toni Turners Book- Short Term Trading in the New Stock Market - www.toniturner.com

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Trading Journal - Setting up the Trade

Entry Price

Risk

Initial Target

Why did you do the trade?

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Trading Journal - Analyzing the Trade

Entry Price

Risk

Initial Target


Exit Price

Analyze the trade

350


Entry Price

Risk

Initial Target


Trading Journal - Setting up the Trade

Support from a few months ago

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Entry Price

Risk

Initial Target

Why did you do the trade

Exit Price?

Analyze the trade

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Entry Price

Risk

Initial Target

Why did you do the trade

Exit Price

Analyze the trade

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Putting it all Together

Trading ChecklistTrading Checklist

Have VALID Candle signal (if not sure-confirm with Nison candlestickrecognition software)

Does candle confirm Western signal (i.e.ADX, support/resistance, volume, or anyof your favorites)

Stock traders check sector

Determine risk/reward (remember manyof the candle signals can be used as aprotective stop)

Monitor trade (i.e. time or trailing stops,change in technical picture, etc)

Use Trade Journal

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steve nison’s candlesticks re-ignited advanced workshop ... · 2 steve nison’s candlesticks...

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