Hammer Friday - 29th Jan 2010

[vinnie]

Vinnie. Good to know your views on it. Below are my views on what you have mentioned..

I don't think so that there is no strong/weak signals. Will u treat following hammers as same
1) Which has got no upper tail,
2) Which has got 10% upper tail
3) Which has got 40% upper tail.

If you look at psychological interpretation of them, then they pass the different message about strength of bullish force on display. I would certainly trust 1) occurrence more then the 3) from above list.

Similarly, if you bullish hammer, after few bullish days, then I will discount the message given by this hammer.. Just chk out the hammers on 4th-Jan/12-Jan/ 22-Jan.

Hammers have a success rate of about 60%, but if I need to increase my odds then I prefer to read additional signals and qualify the strength of hammer. I can't be theoretical in my trading and got to risk my money where odds are stacked in my favour.


Might be good enough for you. Nothing wrong with it. . But I need something more then this to risk my money..


I read both hammers differently. On Friday, previous bearish trend continued in first half and then Bulls have appeared which has overcome the bearish pressure. So it was reversal day for me.
On Monday, it was just the initial exuberance of gap orders that made the low, but then bulls continued there journey from yesterday. So it was continuation day for me.

And today, we see the effect of continuation hammer, which is wiped out to large extent. This gives me hidden signal about the weakness of bullish trend, and strength of bearish trend..
Bullish force of Reversal hammer is yet to be tested. If bears take out the reversal hammer as well, then I know how is more strong at the moment ?


I would never know after 1 bar, whether it is short term bottom or not. but with all the background of hammer formation, I do take it as short term bottom in just 1 bar. That is as fast as I can get without depending on all lagging indicators to tell me after 3days or 5 days that we have made the bottom. So I take a chance, knowing very well that my risk is for 100 points or 1 bar. Of course, I have 50/50 chance of being right or wrong.. so who cares.. atleast my risk is small now (in this case it is 1 daily bar), and I see better odds in my favour.. so take the trade. There is no guarantee of being 100% right in the market. So it is matter of individual's strategy of trading.

I very well accept your arguments and they are not wrong. It is just that I think and trade differently cause if I do what everybody else does then I would be getting what everybody is getting and certainly I don't want that.

Happy Trading

Thanks AW10 for analyzing the views, but these are not my views. These are universal and prominent rules across stock markets... if you read it by paying with more close attention. What you are viewing and posting is "YOUR OWN" stuff.. which may work for you but not for the one ....as you mentioned "at least 1 trader (more is better)".

I won't be saying much (as everyone is a responsible trader) except to go back to this thread again from top right where Oguru has detailed everything and read/re-read and take a view on what happened today.

BTW, after hammer a real cool Bullish engulfing (image attached) has formed which has evidently stated that bears are out of the market arena - AS OF NOW.

So Welcome to the Bull's World.

Wish a Happy Trading!!!

-Vinnie

 

[vinnie]

Absolutely Spot on !! :thumb:

Think out of the box guys. This post just reflects the need of doing so ...

Tc.

Yes - It's really out of the box. But for sure not for this post... :clap:

 

[SwingKing]

Thanks AW10 for analyzing the views, but these are not my views. These are universal and prominent rules across stock markets... if you read it by paying with more close attention. What you are viewing and posting is "YOUR OWN" stuff.. which may work for you but not for the one ....as you mentioned "at least 1 trader (more is better)".

I won't be saying much (as everyone is a responsible trader) except to go back to this thread again from top right where Oguru has detailed everything and read/re-read and take a view on what happened today.

BTW, after hammer a real cool Bullish engulfing (image attached) has formed which has evidently stated that bears are out of the market arena - AS OF NOW.

So Welcome to the Bull's World.

Wish a Happy Trading!!!

-Vinnie

Dear Vinnie,

The point where you refer to "YOUR OWN" stuff reminds me of Percy Barnevik. Am sure you haven't heard about him and hence would ask you to search your reference books. You will definitely read about the "HERD PRINCIPLE" when you search your books regarding Percy. Understanding the "Herd Principle" will surely help you understand what AW10 posted.

If you can't find it, please search for some of the greatest traders of all time, they'll surely re- iterate what AW10 has posted.

See, you may be right in your way and it's really great. But I don't think you quite understood what AW10 tried to highlight.

Anyway stick with what you think till things work for you.

All the very best going ahead.

Tc.

 

[vinnie]

Dear Vinnie,

The point where you refer to "YOUR OWN" stuff reminds me of Percy Barnevik. Am sure you haven't heard about him and hence would ask you to search your reference books. You will definitely read about the "HERD PRINCIPLE" when you search your books regarding Percy. Understanding the "Herd Principle" will surely help you understand what AW10 posted.

If you can't find it, please search for some of the greatest traders of all time, they'll surely re- iterate what AW10 has posted.

See, you may be right in your way and it's really great. But I don't think you quite understood what AW10 tried to highlight.

Anyway stick with what you think till things work for you.

All the very best going ahead.

Tc.

Hi Raunak,

Thanks for recommending the Author, I would definitely like to check. Since I have done Psychiatry, I know what is "HERD Principle". If you are in support of this principle, then you should know how to use it for your benefit in a best interest of time and same message to AW10.

But in my case if I am not supporting this principle, then I would consider it to be one of the psychological principle of scam.

Again, I am not enforcing to consider it to view it in my way and as you said "you may be right in your way and it's really great".. I never said in my post that "I AM RIGHT", "IT'S WORKING FOR ME" or I didn't written anywhere that I didn't understood what AW10 has posted / highlighted. In fact I have appreciated and thanked for the reviews.

To sum it up....I am just putting things in right perspective, or you may call it doing predictable analysis on chaotic system.:

-Vinnie.

 

[AW10]

Thanks AW10 for analyzing the views, but these are not my views. These are universal and prominent rules across stock markets... if you read it by paying with more close attention. What you are viewing and posting is "YOUR OWN" stuff.. which may work for you but not for the one ....as you mentioned "at least 1 trader (more is better)".

Vinnie, I never said that the stuff written in book is wrong. I have also learned my candlestick basics from Steve Nison /Bulkowski / John Murphy's books. But I did not accept that as ultimate gift of God and continued with further reading/research and modifications. If after my research, I can filter 10 to 15% of false signals from a pattern, then doesn't it help my trading.. or for that matter anybody else's trading.
That's why I am sharing my additional points on it.

I won't be saying much (as everyone is a responsible trader) except to go back to this thread again from top right where Oguru has detailed everything and read/re-read and take a view on what happened today.

You open any book /site /free pdf on CStick, and u are going to get what OGuru has posted in this thread or evening star thread. In both the threads, I have agreed with original post.. and they are well written and absolutely correct. But what I am mentioning is extension of that fundation. Unfortunately, u will not get this stuff in many books so easily. And I know it well cause I have put effort to dig beyond the basics.

BTW, after hammer a real cool Bullish engulfing (image attached) has formed which has evidently stated that bears are out of the market arena - AS OF NOW.

You may not agree but Isn't that the strength that I had mentioned 3 days back and placed my trust on this hammer and called for short term bottom for next few days..
Currently I am enjoying the time decay on my short put trades which was created based on Strong Hammer near the market close of last Friday (ofcourse it was not naked short but well protected for my risk appetite).
At the end of the day, it is important to take action and benefit from what we see.

Vinnie.. I think we have different set of beliefs about eductation, trading, research etc. And lets agree to disagree with each other and enjoy our trading..

Happy Trading

 

[vinnie]

Dear AW10,

I agree with what you are saying and I thank you for reading and taking your time to write your valuable thoughts. As an individual we work hard for life so your views and opinions may be a disagreed opinions for me and me only. Hence, I am not enforcing my thoughts on others as I replied to Raunak in previous thread.

You have full right to contradict the wrong which you feel, and nothing wrong in it and same as applies to me. Because it's after all your money and brain getting applied/drained in the market world and again same applies to me as well.

So if others feel that you are helping the traders, then they might be benefiting from it, which I feel it's not bad at all. But for me it's just like reading Biology after being a student of Physics/Psychiatry... Because, I share what I think is true for me or like minded individuals and take some time to consider and apply others thought in my strategies.

-Vinnie.

 

[DanPickUp]

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[oguru]

DanPickUp,

It really depends on your strategy in Trading. Candlestick charts, like any other technical analysis methods, is not astrology that predicts what will happen next. Rather candlesticks are just an indication of what is happening now and the mass psychology of the trade happens every now and then.

Based on what is happening now, the bullish trend is intact and it is confirmed by the bullish engulfing pattern occurred today.

So if you are in long position, stay long. If you want to enter in long position watch the lower levels tomorrow and enter. But do not short, the candlesticks are saying "This is not the time to short".

 

[DanPickUp]

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[oguru]

The best possible way to do this in options is to create a spread in your anticipated direction. If the spread is doing good and moving in your anticipation continue with it. If it is moving opposite to your anticipation, convert it to a Ladder.

This is one of the methods used by experts.