A mahDualCandlePattern

[Borsz]

Hi @aligator,

Thank you for sharing this indicator. I spent some time analyzing these signals and read Ken Kalhoun's original article. The signals looks rather promising than useless.
May I ask what Multiplier parameter exactly mean? What does is calculate, how does it affect the signals?

Would you be partner in programming an automated Ninja strategy based on this indicator? Not for free, obviously.

Thanks and regards,
Peter

[Borsz]

aligator
I'm asking it because I see candles which should be dual candles, but the indicator does not show it. I attach an example. This is probably because of the Multiplier parameter.
Or the HMA. Also, it is not quite clear for me how the HMA filters the signals. What did you "tell" the indicator how to use the HMA?

Thanks a lot for your time to answer my questions.
Peter

[aligator]

aligator
I'm asking it because I see candles which should be dual candles, but the indicator does not show it. I attach an example. This is probably because of the Multiplier parameter.
Or the HMA. Also, it is not quite clear for me how the HMA filters the signals. What did you "tell" the indicator how to use the HMA?

Thanks a lot for your time to answer my questions.
Peter

Borsz, Hi.

Bassically, Calhoun's Idea is if you see two green candles in an "Up Trend" and the body of the second one is 2 times the size of the first one then you have a buy signal, as you have shown in your chart. That is not enough for risking trades, in my opinion.

We all know that computers are stupid unless you tell them how to determine if we have an Up Trend. That is why I introduced the HMA as a measure of trend direction. Without some means of trend determination no one can tell when trend starts or ends. No system would know when to buy unless it is programmed to buy ALL two green bars regardless of trend. Basically, buy signals are generated only if HMA trend is rising. Of course when using the HMA or any other momentum indicator you will miss some signals that are against the trend. Calhoun does not tell you how to determine the trend, but you would take only those trades when momentum is positive.

In addition to Long trades the indicator also uses reverse rules to generate Sell signals in a down trend. It can be used for any market, day trading, swing trading or long term investment with user options.

After 45 years in trading and writing systems and indicator since DOS and Metastock days, I know if the second bar is twice the size of the first bar, most of the opportunity has already past, specially in day trading or swing trading. A $20 stock has little chance to make any money if bought at 50 cents higher than the high of the second green bar. That is why I introduced a Mutiplier variable so that the user can decide the size of the second bar compared to the first bar. You can change it to 2 for Calhoun's definition. I think 2 is high and I personally would use 1 - 1.6. We know if the price moves beyond 0.618 or 1.618 fib retracement or extension the move has a good chance of continuing the trend, and it is time to buy. So why wait?

I have discussed the logic and some of these points in the indicator script that you can read by opening the indicator in NinjaTrader editor.

I have no interest in automated strategies. During the past many years I have learned that automated strategies are simply not working and you can not replicate promising sim trades in real trading. My trading is completely discretionary using an accumulated 45 years old tool box.

I do not know your trading goals and objectives but computers are as dumb as a piece of metal. They will do what you tell them to do and have no way to judge unexpected market events. That is how people using automated strategies burn several accounts before finding an edge and trade with discretion.

Let me know if this answered your questions.

Cheers!

[Borsz]

Hi aligator,

Thanks a lot for your detailed reply.

Let me please clarify, so multiplier of "2" means the body of second bar must be at least twice higher than the body of first bar? So the default "1.618" means the body of second bar must be at least 1.618 times higher than the body of first bar (i.e. 1.618 produces more signals than 2)? Am I right?
It is a bit confusing, because in the post you published the indicator you write "Use a value of 1 for Calhoun's method. ".

So the circled case on the previously attached chart was not signed as dual candle, because the HMA was still pointing downwards, now I know.

My trading goal is to find a little edge on the market with a strategy that trades frequently, works on any liquid futures market and time(frame) is not an input, only price move. 52-54 percentage profitable is enough at RR=1, but tiny small DD is very important. This is scalping, based on pure probability calculation. No fundamentals, no swings, no technical analysis, no time the "machine" should consider. This approach may be very far from many traders' attitude.

Thank you.
Cheers!
Peter

[Borsz]

Hi aligator
If you have some time, I would really appreciate your answers to my questions.

Thanks a lot,
Peter

[aligator]

Welcome. Answers to your question are in RED.

Hi aligator,

Thanks a lot for your detailed reply.

Let me please clarify, so multiplier of "2" means the body of second bar must be at least twice higher than the body of first bar? (Yes, at least 2. Caloun's rule) So the default "1.618" means the body of second bar must be at least 1.618 times higher than the body of first bar (i.e. 1.618 produces more signals than 2)? Am I right? (Yes, as I noted 1 to 1.6, provide more signal and better R/R)
It is a bit confusing, because in the post you published the indicator you write "Use a value of 1 for Calhoun's method. ".(1 is a Typo that I can't go back to fix)

So the circled case on the previously attached chart was not signed as dual candle, because the HMA was still pointing downwards, now I know.(Yes)

My trading goal is to find a little edge on the market with a strategy that trades frequently, works on any liquid futures market and time(frame) is not an input, only price move. 52-54 percentage profitable is enough at RR=1, but tiny small DD is very important. This is scalping, based on pure probability calculation. No fundamentals, no swings, no technical analysis, no time the "machine" should consider. This approach may be very far from many traders' attitude. (Not at all. But percentage is misleading. Trade selection and trade management is what makes a system profitable not the win ratio. You can have 35% winners and still be profitable - big winners, small losers.)

Thank you.
Cheers!
Peter