Strategy Based On Chart Pattern

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Ali Son
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Postby Ali Son » Sat Jun 24, 2006 11:05 pm

Could you, buddy old boy?!? : :)

-OS

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fatdog1
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Postby fatdog1 » Sat Jun 24, 2006 11:13 pm

TheRumpledOne wrote:"TRO has become proficient with Trendlines, so he might be able to bang this part out. "

You want me to "white wash" your fence too? LOL! :lol:


You white wash the fence, I wax on, wax off. :D

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Postby TheRumpledOne » Sun Jun 25, 2006 12:16 am

Using High[1]/Low[1] as inputs gives breakout lines.



Forgot that I can't use currentdate on the weekends!!

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Postby fatdog1 » Sun Jun 25, 2006 12:40 am

Ali Son wrote:TRO has become proficient with Trendlines, so he might be able to bang this part out.

In the mean time, I'm working on getting the bull/bear flag signal out of the Darvas box. Can you better describe that part in plain English. Visually, one can undertand it after looking at all your charts, but putting it into a 2-3 phrase of what price is actually doing in tha process, can help make the coding easer and more apparent.

Correct me if I am wrong but it goes something like this:

1) initial strong penetration of the Darvas congestion box lines of support or reesistance area with

2) retest: an immediate pullback to the congestion area's (trading zone)opposite pararell line (i.e. the line that was not penetrated) constitutes the initial flag pole; and,

3) upon this successful retest (bounce or containment in the congestion area) and subsequent repenetration of of the line that was penetrated with (confirmation of type of flag), GO LONG/SHORT accodringly in that direction as price will continue to move in that direction

4) (unless it is a stage 1 or 4, of course...but this Weinstein part of the code will have to be taken cared of separately.

So, is this flowchart of the Flag Pole/Darvas box entry trigger consistent with your vision? Modify and clarify as you see fit, and I'll go about making it happen.

BTW, looking at jyust our charts with the Darvas strategy boxes, it's not apparent precisely how the flagpole signal is firing.

-optionswings


Hey Ali,

Lets try each question one by one.

Lets also seperate the DarvasBox with a key reversal candle added from the Stan Weinstein 4 stages of a stock life cycle into two seperate trading ideas so as not to confuse anyone.

1) initial strong penetration of the Darvas congestion box lines of support or reesistance area with

A flag pattern is like a flag sitting on top of a flagpole.
The DarvasBox lines have nothing to do with support or resistance and is not penetrated by the flag pole.
The DarvasBox as it is currently coded simply plots a box around a congestion area after a certain number of similar candles or bars form.
I don't know why but it sometimes plots after as few as 4 candles or as many as 30.
It then takes a long trade after the top of the box is broken or a short trade after the bottom of the box is broken.

I think that if a condition was added to the code that for long trades a key reversal up candle proceeds the congestion area, it would improve the odds that a long breakout trade will be successful.

That is the tie in to the bull flag breakout which is a up flag pole followed by a congestion area and a breakout to the upside.

That would in affect be a new bull flag indicator and bull flag breakout strategy.

The bull flag breakout is the most successful pattern per Tom Bulkowski in this months Active Trader magazine.

The reverse for any short trades would be a key reversal down candle before the congestion area and now you have a bear flag breakdown.
That's all I am trying to change with the DarvasBox code.

As far as a tie in with the Weinstein 4 stages, a bull flag could be described as a stage 212 breakout.
A bear flag would be a stage 434 breakdown.

With a 212, you would have a stage 2 uptrend because of the key reversal up candle, or up flag pole, or rally candle, or momentum candle, whatever you want to call it, followed by a stage 1 basing area or congestion area, followed by a breakout into a new stage 2 uptrend.

With a 434, you have key reversal down candle or down flagpole followed by a stage 3 top area followed by a new stage 4 downtrend.

2) retest: an immediate pullback to the congestion area's (trading zone)opposite pararell line (i.e. the line that was not penetrated) constitutes the initial flag pole; and,

Retest is possible but not necessary and does not always happen.
A retest of a breakout is another opportunity to enter a trade if the initial breakout or breakdown was missed. This pullback to the congestion area happens after the key reversal candle or flag pole and the congestion area or basing area above the flag pole and the breakout of the congestion area to the upside has occured.
The flag pole or key reversal candle is always the first thing that happens in the bull flag pattern.


3) upon this successful retest (bounce or containment in the congestion area) and subsequent repenetration of of the line that was penetrated with (confirmation of type of flag), GO LONG/SHORT accodringly in that direction as price will continue to move in that direction

You are in the trade with the DarvasBox once the top of the congestion area is broken on a breakout.
An immediate retest may or may not not happen.

A retest might happen at some point in the future.
Since it was a successful long trade the first time, it may be another successful long trade in the future especially if it is a pullback in a larger timeframe uptrend.

4) (unless it is a stage 1 or 4, of course...but this Weinstein part of the code will have to be taken cared of separately.

The 4 stages are
Stage 1 is a basing area before a uptrend
Stage 2 is a uptrend or advance phase
Stage 3 is a top area before a downtrend
Stage 4 is a downtrend or decline phase.

So, is this flowchart of the Flag Pole/Darvas box entry trigger consistent with your vision? Modify and clarify as you see fit, and I'll go about making it happen.

The flow chart for a long trade is a up flag pole followed by a congestion area or flag which the DarvasBox plots around and then the breakout of the flag into the long trade.

BTW, looking at jyust our charts with the Darvas strategy boxes, it's not apparent precisely how the flagpole signal is firing.

That is why the DarvasBox needs the modification.
It takes too many losing trades the way it currently is coded.
Last edited by fatdog1 on Sun Jun 25, 2006 11:10 am, edited 2 times in total.

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Postby TheRumpledOne » Sun Jun 25, 2006 12:45 am

TheRumpledOne wrote:"TRO has become proficient with Trendlines, so he might be able to bang this part out. "

You want me to "white wash" your fence too? LOL! :lol:






I modified the MSHIENER scalper indicator to work on daily/weekly....

Remember you can adjust the inputs.
Attachments
SCALPER_WEEKLY.ELD
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Postby fatdog1 » Sun Jun 25, 2006 1:10 am

TheRumpledOne wrote:Using High[1]/Low[1] as inputs gives breakout lines.



Forgot that I can't use currentdate on the weekends!!


TRO,
That breakout would have happened for us about 8 dollars ago and would already be a big winner even though it is coming up on the breakdown line. There might be some profit taking here.
If you could, please try to add the code from the key reversal up candle to the DarvasBox as a condition to the ploting of the box for long trades.

Key reversal up candles indicate support is near.
It could be a major improvement.
BTW, when I scalp on 5 minute charts, I try to buy the key reversal candle because I know where the areas of support and resistance are.
After the first congestion area forms and the next breakout happens, I trail my stop to the back of the new congestion area.
The DarvasBox breakout is the next best place to get in if I miss the key reversal candle or if I can't watch the screen. I still need to manually turn the DarvasBox on after the key reversal candle or it would short me to the poor house.
Now I run the long on one chart and the short on another.

The Weinstein 4 stage code might be harder because of the vertical and horizontal channels. He also uses RSI and a 40 week MA cross as triggers and increasing volume also to confirm the breakout.

Have you ever read his book?

Man I wish I could come up with a better way to explain myself.

Last edited by fatdog1 on Sun Jun 25, 2006 8:21 am, edited 2 times in total.

Ali Son
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Postby Ali Son » Sun Jun 25, 2006 1:10 am

"The bull flag breakout is the most successful pattern per Tom Bulkowski in this months Active Trader magazine."

Too bad he didn't give a rudimentary code to develop.

-OS

fatdog1
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Postby fatdog1 » Sun Jun 25, 2006 1:14 am

fatdog1 wrote:
TheRumpledOne wrote:Using High[1]/Low[1] as inputs gives breakout lines.



Forgot that I can't use currentdate on the weekends!!


TRO,

That breakout would have happened for us about 8 dollars ago and would already be a big winner even though it is coming up on the breakdown line. There might be some profit taking here.
If you could, please try to add the code from the key reversal up candle to the DarvasBox as a condition to the ploting of the box for long trades.

Key reversal up candles indicate support is near.
It could be a major improvement.
BTW, when I scalp on 5 minute charts, I try to buy the key reversal candle because I know where the areas of support and resistance are.
After the first congestion area forms and the next breakout happens, I trail my stop to the back of the new congestion area.
The DarvasBox breakout is the next best place to get in if I miss the key reversal candle or if I can't watch the screen.
The Weinstein code would be harder because of the vertical and horizontal channels. He also uses RSI and a 40 week MA cross as triggers for his breakouts.

Have you ever read his book?


How does this scalper determine support and resistance?
Last edited by fatdog1 on Sun Jun 25, 2006 1:26 am, edited 1 time in total.

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TheRumpledOne
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Postby TheRumpledOne » Sun Jun 25, 2006 1:19 am

"The Weinstein code would be harder because of the vertical and horizontal channels. He also uses RSI and a 40 week MA cross as triggers.
Have you ever read his book? "

I have read so much, I really don't know.

All that matters is taking profit.

I keep it simple.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

Please do NOT PM me with trading or coding questions, post them in a thread.

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Postby TheRumpledOne » Sun Jun 25, 2006 1:21 am

"If you could, please try to add the code from the key reversal up candle to the DarvasBox as a condition to the ploting of the box for long trades. "

Next time I mess with the box, I'll take a look.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



Please do NOT PM me with trading or coding questions, post them in a thread.

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