Master Candle Trading

The Master Candle Defined

There is a few ways to look at master candles but we will only focus on one. A Master Candle is simply a candle's high and low which engulfs the next four candles' high and low. I like to call the formation a True Master Candle (MC).
Master Candle Trading
Method Overview
We are looking to trade a breakout of the master candle formation “A breakout is when prices pass through and stay through an area of support or resistance.”The main reason I like the master candle formation is because it represente the time in the market where price falls into a tight range for a normally short period of time. We are looking only to trade True Master candles like in definition above. The main reason for this is they provide a clear pattern and break point plus over the long term better results. (From my experience) NOTE: We are looking to only trade master candles on a 60min chart.
What we are looking for!
We are just looking at just two pairs which are.
GBP/USD | GBP/JPY
On these pairs we are first looking for a master candle to form and after that we are looking to trade the break of master candles high or low. For the trade to be valid the break of the master candle high/lows must occur
in the next three candles. Lets break this down into a simple statement: MC C1 C2 C3 C4 | B1 B2 B3
Now for the picture worth a thousand words.
Master Candle Trading
We have added to our statement B1 B2 B3 which stands for Break One, Break 2 Two, Break Three. The trade is ONLY valid if the break happens on one of the B1 B2 B3 candles. If it does not like the picture above it is a null trade.
Master Candle Trading
The above picture is an example of a null trade where the break of the master candle did not happen within the B1 B2 or B3 candles.
Master Candle Trading
The above picture is an example of a successful break of the master candle which happened on the B2 candle. (Long position).
Master Candle Trading
The above picture is an example of a successful break of the master candle which happened on the B1 candle. (Long position).
Trading Rules
Every method has rules and this one is no different. But remember rules are meant to be broken (sometimes). No Trading into a SR (Support/Resistance)area
If the Support and Resistence is closer than the size of the Master Candle then no trade.
Trade only on the B1 B2 B3 Candle's breaking the MC High/Low
Currency pairs: GBP/USD, GBP/JPY
• Trade Master Candle sizes between 40-105 pips
• If Master Candle is greater or less than the above sizes then no trade.
Entries
The most important part of the method.
Buy:
5 pips above the Master Candle High + Spread. As you can see in the picture below the green line was our long entry
Master Candle Trading
Sell:
5 Pips below the Master Candle Low. As you can see in the picture below the red line was our short entry
Master Candle Trading
Exits
If you want to make money you need to close your trade at some point.
Profit Targets:
Profits will vary in pip from pair to pair but as a general rule you want to target the size of the Master Candle. So if the size of the master candle is 35 pips we set our profit target at minimum of 35 pips as the example below. Now sayingthis it is very important that we base our target on price movement over astrict rule of Master Candle size. So if the next price area that you can see a turn around is 80pips away then you should be targeting there.
Master Candle Trading
Stop Loss:
Stops are meant to be used to give you the MAXIMUM possibility to win in your trade. Their placement will also clearly show you that your direction was incorrect. With this in mind the stops are placed on the other side of the
master candle entry.
Master Candle Trading

Chart examples
Master Candle Trading
Sunday / monday gap trade which is a leave alone trade
Nice short setup (B2)
Nice pull back for a long setup (B2)
After the break up to the number 3 setup and pull back to this zone was a nice short. (B2)
Strong break short. (B3)
No break on the third candle so no trade
Break by 1-3pips from memory this trade took a while to give profit. (B3)
Master Candle Trading
Nice clear break for profit. (B1)
Pull back to support zone ready to copy number 1. (B2)
No trade as there was no break on third candle.
Great short setup while price stalled at that level. (B2)
Short break on second candle with a quick stop. (B2 then stopped on next candle)

Master Candle MT4 Indicator

Below the link for download Master Candle MT4 indicator.
https://drive.google.com/file/d/0Bwjv2Pbf48itRzZUWVhrU0hScXc/view?usp=sharing

Related

Pattern Trading 1965427083580810151

Post a Comment

emo-but-icon

item