This indicator draws candlesticks in accordance with the color of the bars in histogram of the 2pbIdealXOSMA indicator
Fig.1 The 2pbIdealXOSMA_Candles indicator
Author: Nikolay Kositsin
Indicators: X2MA Transform Candles
newdigital, 2013.11.05 08:13
Based on Swing Trading Entry Strategy
Your swing trading entry strategy is the most important part of the
trade. This is the one time when all of your trading capital is at risk.
Once the stock goes in your favor you can then relax, manage your
stops, and await a graceful exit.
With your entry strategy, the first thing that you want be able to do
is identify swing points. What's a swing point you ask? This is a
pattern that consists of three candles. For entries on long positions,
you look for a swing point low. For entries on short positions you look
for a swing point high.
For a swing point low:
This third candle tells us that the sellers have gotten weak and the stock will likely reverse.
For a swing point high:
This third candle tells us that the buyers have gotten weak and the stock will likely reverse.
For our long entry strategy, we are trying to find stocks that have pulled back and made a swing point low.
Let's look at some examples:
See how the pattern consists of a low (1), lower low (2), then a
higher low (3)? This is a classic swing point low. Our entry strategy
would be to enter this stock on the day of the third candle.
Now lets look at a stock on the short side.
See how the pattern consists of a high (1), higher high (2), then a
lower high (3)? We would look for an entry on the third candle.
It is worth noting that not all swing points will result in a powerful reversal. However, a reversal will not happen without a swing point developing. Take the time to go though a few stock charts and look at the reversals that happened in the past so that you are able to quickly identify this crucial price pattern.
Ideally, we want to trade stocks that have consecutive down days prior to the swing point low developing. This is the best case scenario. Here is an example on the long side:
This is reversed on the short side. In this case, you want to look for consecutive up days prior to the swing point high developing.
When you are looking for swing points to develop, you always want to
look to the left of the chart to see if the stock is at a support or
resistance area on the chart. That will improve the reliability of this
Also, sometimes you may want to be more aggressive with your entry.