The reason it works is because this is essentially a first channel breakout that you expect to fail. Note that you need a trend bar with a strong close. A doji such as b57 or a weak close such as b11 is usually not reliable. Often this is just an optimization since you get a signal right after (b16, b30, b61) and you can simply choose to trade it with a normal stop entry.
Cad, what was your reason for re-entering on b9 after being stopped out? Is it the same reason as b7 on Feb 1st?
ReplyDeletethanks
The overall reason was the same, the bar that stopped me out did not invalidate the prior signal. In today's case, it was simply a large signal bar whose theoretical stop was not taken out. On 2/1, the bar that stopped me out gave a new oio reversal signal.
Deletethanks a lot Cad for explaining.
DeleteHi Cad, does the opposing trend bar have to pull back to trap counter trend traders? All three trend bars did.
ReplyDeleteWhat is the best way to define a channel in Ninja script terms - e.g. check for overlap in recent bars?
No, it does not have to trap traders. The opposing bar itself is viewed as a legitimate entry point by limit traders.
DeleteA channel is any non-horizontal move where most bars overlap and extend only a few ticks beyond their preceding bar.