Forex Q&A

Beginner Reading

Technical Analysis Explained, 4th Edition – Pring, Martin J
New Trading Systems and Methods, 4th Edition – Kaufman, Perry J.
The Definitive Guide to Point and Figure – Jeremy du Plessis

Intermediate

Elliott Wave Principle, Tenth Edition – Frost, A.J. and Prechter, Robert R.
New Trading Systems and Methods, 4th Edition -Kaufman, Perry J.
Investment Psychology Explained – Pring, Martin J.
Japanese Candlestick Charting Techniques, 2nd Edition – Nison, Steve
Evidence-Based Technical Analysis – Aronson, David R.

Advanced

Technical Analysis The Complete Resource for Financial Market Technicians – Kirkpatrick, Charles D. and Dahlquist, Julie R
Technical Analysis for the Trading Professional – Brown, Constance M.
Intermarket Analysis: Profiting From Global Market Relationships – Murphy, John J.
Irrational Exuberance, 2nd Edition – Shiller, Robert J.

Having difficulties loading ProChat or the screen turns black when you do load it? These are usually caused by Java and are quickly resolved using the steps below:

1) make sure you have the latest version of java installed:
http://www.java.com/en/download/installed.jsp?detect=jre&try=1

2) clear your Java cache:
http://www.java.com/en/download/help/plugin_cache.xml

3) Try a different browser.
FireFox 3.6+ is the preferred browser (if it works in a different browser then it might be your java security settings, or related to #1).

4) Clear your browser cache:
http://www.wikihow.com/Clear-Your-Browser%27s-Cache

If none of these steps work for you or you need additional support contact support@piphut.com

Understanding how CandlePro uses the 10-Candle Strategy and how drawdown is calculated within that system is key to really seeing through the system, and seeing through the system will ultimately help you utilize the tool better in your trading.

I’ve put together this Q&A to help everyone benefit from the answers I’ve given in emails and chat posts about 10-Candle Strategy and drawdown. Here goes:


Question #1 – Hey, I think the drawdown numbers are wrong in CP! When I look at the 10 candles after a signal it went down X pips and CP lists it as Y pips. What gives?

Answer: If you think there is a discrepancy then you should email me (support@piphut.com) so I can take a look but read this first:  99/100 times CP is functioning perfectly but you need to understand how the drawdown is calculated. The drawdown is the most the pair moved against your BEFORE hitting the 10 candle profit – anything after is discarded as the purpose is to know where to put our stop-loss to hit the 10-candle profit.

Question #2 – Why is it set up that way?

Answer: It helps to think about what we are trying to know: ON AVERAGE, how much does the pair move AGAINST (drawdown) our position before hitting the highest AVERAGE point in 10 candles (10-candle profit). If we were to take all 10 candles into consideration for the drawdown it would no longer tell us where to put our stop-loss to get to the 10-candle High, it would tell us where to put our stop-loss to get through 10 candles, regardless of what the 10-candle high is. Which isn’t very useful.

Question #3 – I’m still confused. What if it moved in your favor 30 pips first 5 candles then down 60 pips last 5 candles for a loss of 30 pips, is the candle profit 30 and drawdown 30?

Answer: In your example your 10-candle profit = +30. Your drawdown would be the most the pair moved against you BEFORE that fifth candle.

Let me see if I can draw this out with letters. Here is what I know from your example above:

X X X X +30 X X X X -30

Those ‘X’s represent the current profit of the pair. Let me add some values to that:

5 -10 0 20 30 X X X X -30

Now the drawdown is -10, because that is the most the pair moved against your BEFORE hitting the 10 candle profit (which it hit on the 5th candle ’30′).

Question #4: What if it moved up one pip the first candle then back down to entry and stays the the rest of first candle , then down 15 for the last 9 , since the first candle was the 10 candle profit level (1 pip) with out ever going against you, would that not make the drawdown 0 instead of -15?

Answer: Yes, that would make the drawdown 0 and the 10-candle profit +1. Not a very compelling candlestick setup!

Question #5: Doesn’t this skew the stats? Meaning that if this is the case if the price moves the right way just a little (before reaching any reasonable profit target) and then moves against you dramatically, CandlePro will NOT report any negative move that happens after the correct move, even if it’s within the 10 candle. However, if it’s the other way around, Candle Pro will report the dramatic correct move which went the correct way within 10 candle.

Answer: This would be true if we were only looking at one signal. The power of CP is that it gives us crunches the data on up to 50 previous signals and gives us all the averages/data which means that:

1. If a pair does this often then the RR ratio (both median and average are provided) will be bad because 10-candle profit will be small and the trade wouldn’t be taken in the first place then
2. This is also why I recommend looking at “past trades” in the videos – to confirm the pair has healthy profit levels
3. This is also why I recommend using a SL for all trades (and as an experienced trader I’m sure I’m preaching to choir here) – because no trade is guaranteed and if it moves against you the max you should lose is your SL. Luckily CP analyzes the past signals to give you a good starting point of where to put your SL.

Question#6: I get it now!

Answer: That’s not a question, but great! Remember CP is great in that in crunches all of that historical data for you to make your trades smarter. As stated in all the launch material, user guide, etc., CP is not a strategy in and of itself – it is first a candlestick scanner and second a candlestick analyzer and the real power lies in its crunching of historical data. That historical data (i.e. the performance report) allows you to make smarter trades based off of candlesticks.

The 10-Candle Strategy in one sentence:

10-Candle Strategy tells us this: ON AVERAGE, how much does the pair move AGAINST (drawdown) our position before hitting the highest AVERAGE point in 10 candles (10-candle profit). Knowing this and understanding this helps makes better trades based off CP data.

I got this from a CP user today and wanted to share. I think it encapsulates how people should use CandlePro, not necessarily with this particular strategy but combined with a strategy in general using the power of the performance report to take smart trades.

CP is most interesting to me because of the historical data – it’s amazing. Spotting the pattern once is one thing, seeing how it has performed historically just gives you so much more confidence. I used to trade about 5 yrs ago and let it go. I’ve been back since June with a different approach/mindset and already feel more disciplined.

My most successful trades have been based on the 10day EMA & support / resistance. I often try to find the “Piphut Primary Trade of the day” before you post it to see how we compare.

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Next Open Enrollment

As many of you know, the US session (where I was saving 50 seats as promised) for never happened last week after PipHut got overloaded and temporarily shut down by our hosting provider. We were not able to re-open registration last week because of that, unfortunately, but do not fear! This week those 50+ seats at the discounted rate of $69 will be up for grabs again this week. I will be going through the launch page signup list and emailing addresses on that list in the order in which they signed up.

If you receive an email you have 24 hours to signup at the link provided. If you don’t signup within 24 hours then your *reserved* seat will be offered to someone else.

Why do it this way? Basically to avoid the big rush of people we had last week when I opened enrollment in the first-come, first-serve fashion.

What if you can’t make a particular 24-hour period? Send me an email at support@piphut.com and we’ll work something out.

How do I get on that list? Go to the CP launch page, select “signup info” and enter your info in the form on the right. If you have already entered your info here then you don’t have to do anything, you are already signed up!

Questions? Send me an email at support@piphut.com and I’ll get back to you promptly

CandlePro User Forum

CP is a powerful candlestick scanner and analysis tool, and integrating it with your system is real the real profit lies. Whether it is a scalping system based on 15m candles, a set-and-forget system based off daily candles or a “few trades a day” system based off a mix of timeframes there are literally hundreds of ways you could use CP to improve your trading.

To that end I’ve created the CandlePro Trading Forum.

In the CandlePro Trading Forum you can:

• Share your system – getting feedback will help you hone and make it more profitable
• Share ideas – even a not-very-thought out system is worth a post: it might spur a trading system you hadn’t even thought of yet!
• Get ideas – reading other traders systems is a great way to spur your own ideas

*** Neil has already posted his first trading system, his 15m scalping system using CP. You should read about it here. I’ve also talked with a dozen other CP members who are all either trading or working on their own trading systems using CP and I’ve asked them to share their systems as well, so expect more to come. I will be posting some different systems, trade examples and video tutorials this week as well, and they will be in this forum.

Changelog and Update News

I added a “changelog” and an “updates” tab to the CP User Guide. The changelog will list any changes that were made to the system – tweaks, bug fixes, software updates, etc. The “Updates” will list any general news about CP. Check out the User Guide for more info.

CandlePro Update Emails

If you are a CandlePro member then you are not logged in. Log in and you will see a contact form here. Enter your email address and name, click submit and you will receive an email whenever there is important CandlePro news!
New Contact Methods

I got rid of the clunky old ticketing system for contacting piphut. Now you can simply email PipHut at one of  the following addresses for all the help you need:

• Support: support@piphut.com
• Abuse: abuse@piphut.com
• Billing: billing@piphut.com
• Sales: sales@piphut.com

You can view all contact information at the contact page.

CP Suggestions

I worked hard on making CP the most powerful candlestick scanner and analyzer available anywhere, at any price, but that doesn’t mean there isn’t room for improvement. I’ve already begun work on many suggestions you all have put forward in this first week of use and you’ll see those changes roll out in the coming days and weeks. If you have a suggestion then please do send it to me at support@piphut.com!

CP Contest

I’ll be announcing some sort of contest later this week. I haven’t decided exactly what the criteria will be but I’m leaning toward “who has the most profitable week with CP”. You’d have to email me an account report from the timeframe to prove it, and a requirement would be you have to write about your strategy in the CandlePro Trading Forum. Demo or Live trading would be acceptable.

And for the prize? I’m open to that too, but I was thinking a netbook or a $250 Amazon gift card. What are your thoughts?

Leave feedback in the comments below!

PipHut Premium will be a game changer for forex traders. Hands-down. It will stack the odds back in an independent trader’s favor. But talk is cheap. So instead of just telling you I thought I would show you:

Step 1: Login

Step 2: Pro Dashboard/CandlesPro

This is after you log in. You’ll see your Pro Dashboard and have various tabs of options. First up is CandlesPro. As you can see it is robust. Many timeframes, candlestick formations, pairs and ‘forecast strength’ ratings for you to choose from.

Step 3: Search Candles

After you make your selections and hit ‘submit’ you are shown all the matches, plus a ‘live’ glimpse at the actual formation and a strength-o-meter for forecast strength. Wow! If we stopped here it would be a game-modifier, not a game-changer. Let’s click “View Past Candles”.

Step 4: Confirm profit

Here we can view the past results for all similar candlestick formations! No longer are you taking a stab in the dark about TP, SL and formation quality. Plus view the results based on the 10-candle strategy meaning you are getting immediate return! Game is starting to change, lets see what else we can do. Lets click ” View Performance Report”.

Step 5: Purchase yacht

The game has been changed. For any candlestick, on any formation, for any pair you can view historic performance, average return, average SL, the biggest loss, biggest gain and average reward/risk ratio! This is the sort of info pro traders horde to themselves, and hedge fund managers pay tens of thousands for. Game changed.

Candlesticks are amazing. What about specific entries/exits for strategies? I’m glad you asked. Lets click on that tab and view the strategy summary:

Step 6: Pip Snorkeling

The game has now not only been changed, it has been dismantled, danced upon and recycled. But what about the social aspect, the live trading room?

Step 7: Rinse and repeat.

Now you can all work together in real time, discussing signals and more.

When?
VERY Soon…

I am pleased to announce Trading Groups!

In essence trading groups are a hybrid between the forums some of you use, the post comments most all of you use and the Trader’s Lounge that nobody uses :). I think it is the best of all three worlds though, so I think they will start to catch on. So why are trading groups so great? Good question:

Top 3 Benefits of Trading Groups

1. Specialized groups – having one group for EUR/USD, another for scalping the GBP/JPY, etc. will help keep conversations productive and on topic.
2. Create your own Group – want to create your very own group for an exotic pair, or create a group focused just on 5m charts? Now you can and you can allow anyone to join it, or create a private group that people have to apply for!
3. NEW POST NOTIFICATIONS! – I get this a lot for the main conversations. With groups you get a nice NOTIFICATION if there are any new posts. It checks the server every 2 minutes!

Some of you might have stumbled upon these before as I’ve turned them on and off in the past but never supported or promoted them.

First off the list of trading groups I created as “defaults” can be found here. You’ll also notice in the upper right menu bar I’ve replaced “Trader’s Lounge” with “Members” and under that you’ll find two options: Activity and Groups.

Activity is just the Trader’s Lounge renamed and shows ALL the activity across PipHut for ALL logged in members.

Once you visit the groups page you be presented with the below screen (note: lots of options like “create group”, “join group” etc are ONLY available if you are logged in. If you haven’t already signed up you should sign up now. It’s free and easy.

Screenshot of the Group listings.

As you can see there are plenty of options. The main things I want to point out here are

1) Create a Group – this allows you to create your own group. You can make the group public (meaning everyone can see it and see the content), private (meaning people can see your group and apply to join, but can not see the comments!) and hidden (nobody can see your group even exists – only the people you invite will see it).  The default groups I created are all set to PUBLIC.

2) Join / Leave Group – This is the first thing you will be doing. If the group is public (all the defaults are) then simply click “Join Group” and you will be ready to start posting! If it is a private group then click “apply” and whoever started the group will look at your application.

Once you have joined a group it is pretty self-explanatory but there are a few things I want to touch on (see image below for group screen):

1) Filters – the default filter is “none”, meaning you will see everything – group updates and new group members. If you only want to see updates (i.e. chat) select “Show Updates” from the dropdown

2) Typing – to type your chat message simply type your message in the “what’s new?” text box and click “post update”. Pretty simple.

3) Auto updates! – One of the best features of groups is auto-updates. See that green bar on the image above that says “New Activity Update. Refresh Page.”? That tells you when there are new messages in the group. Simply click it to see the new messages!

There is lots more but it is pretty straight-forward. So explore away and happy pipping!

Question: When you say ”profit targets” in your trading idea (for example in today’s trade: profit targets from 1.2215 are 1.2240, 1.2270 and so on) do you usually move your stop loss to those target areas, or rather close the trades and re-enter? just a bit confused about that. Thanks.

Answer: If it is a higher-probability trade (i.e. with the trend and multiple confirmation) we might use multiple lots and close a lot at each profit target. If it is a very aggressive trade we usually use a single lot and move the SL to breakeven after the first or second target is hit. Please also see the article on when to move stop-losses to break-even:

http://piphut.com/2010/05/when-to-move-a-stop-loss-to-break-even/

The Candlestick Alert System, or CAS, is one of the best free tools available on the internet to help traders spot emerging trend reversals using candlesticks.

The basic CAS currently detects shooting stars, hammers, inverted hammers, hanging men and dojis on the 30m and 60m EURUSD charts. They are reflected on the CAS within 60 seconds of the candle CLOSE – usually within just a few seconds. You can use them with your own trading strategy. For example, if you are bullish on the day, you could buy when a bullish hammer appears.

The detection of the candlesticks themselves using a proprietary PipHut method – you won’t find any indicator that uses that same detection patterns as we do.

To use it simply visit the basic Candlestick Alert System, select the timeframe you want to view and the latest candlestick alerts will appear!

For more information on candlesticks in general check out the forex candlestick guide.