From Thesis to Trade I: Candle Chart
Integrating Tools
This series will serve to integrate trading tools and methodologies in a faster-paced visual format. My trading is fundamentally grounded in the market profile, and that is where we will start each of these lessons, which will be like slides building on each other.
Image 1. Don’t trade every candle in sight. Especially not these
From the series on integrating tools, we now move to the third and final installment entries using candle charts. I’ll keep the profiles as a reference below. Refer to the footprint here.
As always, the first part of the lesson is free as a preview. Don’t miss out on the bulk of the great content. New content is added weekly.
Razor Sharp Candle Charts
Recall the week in study, September 29 to October 3.
Image 2. ES profiles. Areas in review
Let’s study each area using candle charts:
Monday, September 29
Image 3. ES profiles
I stick to a 5m candle chart to cut out the noise. I find that 10m and 15m charts work well, too.
Image 4. ES 5m candle chart
Note the triggers for a short - a selling tail candle (a short body compared to the wick). Stop above the mid on an attempted retest of the tail. Clear as day.
Second opportunity was a fail of the day’s POC (yellow line from a volume profile study). Stop a couple of points above the POC.
Image 5. ES 500 tick chart, AVWAPs
You can use an AVWAP, too, as a guide to buyer vs seller strength. Note how we short retests of the AVWAP from below once we set out short thesis in place (using the profile!)
Once the later AVWAP crosses below the longer AVWAP (from the open), buyers are now on the defensive, strengthening the short case. Read about the theory here.
Let’s see more excellent examples from the week.