Trading the Bounce and breakout of short term ranges.
Japanese candlestick trading has been around for decades. A candle gives a lot of information to the trader. It shows:
- The high for the period
- The low for the period
- The opening price
- The closing price
- The gains made by the bulls or bears
- The range of trading during the period.
This EA focuses on the candle high and the candle low as those reading often represent short term support and resistance. These levels represent decision points when trading this EA. At these points you need to tell the EA to trade breakouts or bounces.
Once the new candle starts forming the trading question is: “Is the price going to break-out of the previous trading range or bounce back to the previous trading range?”
By using the Candle trader EA you can trade either the breakouts or bounce or both as they occur over a 24 hour period.
Bounce or Breakout ?
So the big question is – When is the price likely to breakout of the current range and when is the price likely to bounce back into the current range. The price behaves differently depending on the time of day. In times of low volatility bounces are more likely to happen. In times of high volatility breakouts are more likely to happen.
If you can work this out, you can be a very successful Forex trader. It really isn’t that difficult. Let’s look at ways to work out the time of day when breakouts will occur or when bounces will occur.
Personal observation. Look at the trading charts over a period of 24 hours and identify the quite times (low volatility) and hectic times (high volatility) with larger candles.
Look at recorded statistics. This link https://www.mataf.net/en/forex/tools/volatility will give you statistic of when currencies have low volatility and when they have high volatility during the day and during the week.
Optimising the EA. When optimising the EA you will find the best time when breakouts work and the best times when bounces work. You should do this for all timeframes and all currencies to find the best combination of currencies, settings and timeframes. You can then sort them in order of historic performance.
Forward trading. You can test you finding by trading them for a few weeks on a demo account and then switching to a live account once you are perfectly happy.
Understanding the Candle EA
So let’s look at this EA.
Firstly, this is a trading tool. It must be managed by it owner. It is not a mindless, plug and play, set and forget that requires no thought. Once you have done all the homework required to determine which currency, timeframe and setting will give you the best chance of success can you let it trade automatically. It will then trade looking at the previous candle to find the decision points and activate the decisions as instructed.
So let’s look at the instructions you have to give the EA:-
- The first instruction it asks is the minimum size of the candle. Why this is important is that candles that are too small may not have the minimum volatility to give a reasonable result. When candles are very small like say 2 pips trading decisions may not give consistent results. This setting is also very dependent on the timeframe used. The best way to determine and refine this setting is by using optimisation and forward testing.
- The instruction required if you want to the EA to trade breakout trades or bounce trades. This a drop down menu option. See the discussion prior to this section how to decide that.
- This instruction requires your to tell the EA whether you want to trade Buy only, Sell only or Buys and sell together. This setting is very useful for US traders or when experiencing strong trends
- The next instruction is the maximum spread at which you want to enter trades. You may get an entry signal when the broker has increase the spread due to announcements, weak-ends, liquidity etc. You should not trade when spreads are abnormal and this setting will protect you from doing so. This setting will vary from currency to currency and broker to broker. Common-sense is a good guide to use when determining this instruction amount.
- The next instruction you have to give the EA is how to position size your transactions. This is related to how much do you want to risk per transaction. There are 4 methods. Experiment with all 4. Try not to risk more than 1 or 2 percent of your account in the beginning using any of the methods.
- The next instructions are how big your stop need to be in pips. Simply enter the amount. The amount are best determined by optimisation and forward testing.
- The next instructions are how big your targets should be in pips. Simply enter the amount. The amount are best determined by optimisation and forward testing.
- The next important trading instruction is what time of day do you want to trade. This is very important as there will times of the day when breakouts mainly occur and times when bounces mainly occur. If you want to trade both you simply need to open the EA on 2 charts. On the one chart you would trade breakout settings and on the other bounce settings. Remember to change the magic number as you are trading the same currency with 2 EAs.
- You can choose the include and exclude certain days of the week.
- The last instruction is what magic number you want to use. It is recommended that you use a different magic number for every different currency. You have to use a different number if you are trading the same currency on different charts.
This EA comes with no settings. This is because ONE set of settings could not possibly work for all currencies, all timeframes, all broker account types, all account sizes, all time-zones, all spreads or commission charges, all margin requirements, all daylight savings adjustments, lot size broker policies, price feeds, candle cut off times, broker trading times, trader risk profiles etc. Most EAs fail to perform when using these default settings for those reasons.
That is best is to optimise the EA on the exact broker account you will be using to trade it using the brokers own historical data. Even this will have limitations.
So the forum has been created for owners of the EA to share experiences on how they best trade and test the EA. There will be many tips and ideas posted.
Optimisation training is provided in the Forum.
The Forum is also the place to ask any questions about this EA and for those discussions.
This Forum is Password protected - you will get your password during the PayPal process
So to summarise:
- This EA comes with sound logic and trading principles. It simply buy or sells the previous candle low or buys or sell the previous candle high at a time of day using the stop and target specified.
- The forum will be the place where questions will be answered and trading experiences shared. Most of the training will come from the Forum.
- The EA comes with no suggested settings, set files or assistance regarding settings. These can however be created and shared amongst owner in the Forum.
- The EA comes with no profit guarantee, money back option, trial period or promise of success. In fact, you are very likely to fail if you do not have good EA optimisation skills. The success you achieve is likely to be related to your EA trading experience and EA management expertise.
- This EA comes with no live account history and past testing details. The trading logic described should hopefully give you an idea of whether this is a very powerful EA or not.
The Candle EA in Action
The picture on the right shows the Candle EA in action. See how it sells the previous high and buys the previous low. These are all positive transactions as a 1 pip target and 4 pip stop was used.
Details of all the settings and broker demo accounts you can use to turn 5K into $1Mil are available in the forum. Do not try this on a live account using the brokers supplied.
Use of the Candle Trader EA
The candle trader has mainly been used to trade 4 digit brokers with an unusual price feed on a scalping basis. This was proven to be successful on demo but not possible using a live account. So one of the uses is to trade the EA as a novelty EA to impress your friends and show them how you can take $5K to $1Mil. Details are provided in the Forum for you to do this. That is why this EA is sold at a reasonable price. Don't get your hopes up too much.
Technically, it works perfectly on 5 digit brokers with "normal" price feeds and will work on any broker account. Initial, unofficial tests show that it is possible to trade the 4 hour, 1 hour, 30 minutes, 15 minutes, 5 minutes and 1 minute timeframes on ordinary broker accounts. This EA is not robust on normal broker account (5 digit accounts) and that is why it is sold for a affordable price. Don't get your hopes up too much.
To Purchase the Candle EA for $1 please use the PayPal button below. Your purchase entitles you to use the EA on any 2 computers of your choice as often as you like.
(Access details will be sent to your PAYPAL EMAIL immediately after your payment)