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The Black Candles strategy
The Black Candles strategy uses a unique channel. The channel is based on the popular Heikin Ashi candles. It is capable of detecting the first stage of a new trend. The colour of the candles is not relevant. Therefore, they are black.
The following is typical for the Black Candles strategy:
- A unique channel based on Heikin Ashi candles.
- The channel and the standard candles are in the same chart BUT in a different time frame. Traders can see the action AND have better signals based on a higher time frame.
- The SuperTrend indicator filters the trading signals.
- The profit is maximized with the unique trailing targets.
The Black Candles strategy can be used for day trading and swing trading.
|Suitable for||: Market indices (DAX, DOW ...)
: Forex (EUR/USD ...)
: Commodities (oil, gold ...)
|Instruments||: Futures, CFDs, forex and stocks|
|Trading type||: Day trading|
|Trading tempo||: Several signals per day|
|Using NanoTrader Full||: Manual or (semi-)automated|
The strategy in detail
The channel is based on Heikin Ashi candles. The Heikin Ash candles are not visible in the chart. The black candles visible in the chart are standard candles, familiar to every trader.
shows the trading channel and the black candles. The red line
is the SuperTrend indicator. Its position, above the chart,
and its colour, red, indicate the market is bearish.
Also unique is the fact that the channel and the standard candles are not in the same time-frame but … they are visible in the same chart. This is called an aggregation. Say, the trader sets the aggregation to 2 and the time frame of his chart to 10 minutes. In this case, the black candles are 10-minute candles and the channel is based on invisible 20-minute Heikin Ashi candles.
Traders can set their black candles in a small time frame, for example 5 minutes, and see the market action. At the same time, they can set the aggregation to, for example, 6 so the channel, which gives the signals, is based on 30-minute invisible Heikin Ashi candles. As always in trading, increasing the time frame reduces the number of trading signals but increases the quality of the signals.
When to open a position?
A signal occurs when ...
- the channel changes colour, and
- the trader's conditions regarding the candles are met.
In order to have a buy signal the trader can define the sequence of red ‘block’s and green ‘blocks’ that needs to occur. If the aggregation is set to 2, then blocks consist of two black candles. The default setting for the strategy is two red blocks followed by one green block. A short sell signals consist of two green blocks followed by a red block.
shows a buy signal with the default settings as described
above. Two red blocks (four black candles) and one green block
(two black candles), constitute a buy signal.
The well-known SuperTrend indicator serves as a filter for the signals. Buy signals are only accepted if the trend is positive. Short sell signals are only accepted if the trend is bearish.
The time filter is set to 07h00 – 22h00. Signals will only be accepted during this period. The trader can change these settings.
When to close a position?
The open position is bracketed by
Both the target and the stop are based on the current volatility of the market. The trailing target is unique. This sensational tool automatically changes the profit target. If the tool detects a strong market, it will (continue) to increase the profit target in an attempt to maximize the trader’s profit.
shows a buy signal. Notice how the trailing target moves up to
maximize profit when the market goes up significantly.
shows a short sell signal. Notice how the trailing target
moves down to maximize profit when the market drops
Tip: if you
want to quickly check the profit (loss) of any time frame and
aggregation combination open the equity chart in the Designer
dialog. When you change a parameter the equity chart instantly
shows the impact of the change on the profit (loss).
Using the NanoTrader Full follow these steps:
- Select the instrument you want to trade and open the
- Select the Black Candles strategy in the WHS Strategies folder.
- Set the time frame of the chart and select an aggregation for the channel.
- If required, adapt any other parameters as described above.
- If you want to trade semi-automatically (open position
manually, close position automatically), activate
TradeGuard+AutoOrder in the chart. If you want to trade
automatically, activate AutoOrder in the chart.