Since I get quite a few requests for an explanation of how to use this, I thought I would publish a chart with a few tips and explanations.
[Synopsis] Heiken Ashi Candles + EMA (2) + EMA Offset (2) + SAR
To use this method for trading, imagine that the 2-EMA (yellow line) job is to "hold" the candle as the price goes up. When a candle body starts to fall through the 2-EMA line, it is a sign that price support is failing and a reversal is most likely to occur soon. It's called the "cupping" method because the end of the EMA line will often create a "cup" around the candle as the line elevates the price. The more formed the cup is the more likely the price is to go up.
[Tips] Utilize other indicators in tandem to help confirm early warning signs.
Sometimes waiting for SAR confirmation can take too long as a dump can occur, watch the early warning signs/frequency of them.
Pay attention to the overall market trend, sometimes it's easy to get stuck on a smaller time frame without taking into consideration larger buying or selling pressures.
In tight sideways movement, use discretion with any tool and possibly use higher time frames.
If the market has been very volatile lately, you can try using EMA (1), or if its been somewhat slow/flatlining, use EMA (3). EMA (2) seems to be a good balance overall.
P.S. Sorry about the crowding of the bubbles, somehow crowded them a bit more after publishing them.
评论
DrewR
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Follow-up:
This is an alternative use of the cupping method (one that I personally use as SAR can be too much of a lagging indicator for me).
Look closely at the entry/exit prices.
If it is an exit warning, I'll set an exit price near or slightly *higher* than the warning.
If it is an entry warning, I'll set the price near or slightly *lower* than the warning.
PW
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Thanks for sharing Drew, much appreciated.
JonR
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Very nice drew. I was wondering about the "cups" thing (not the song) everyone was talking about.
ReversedK
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Great method, thanks for sharing Drew
AncientAli3n
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THX!
emjay2d
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Just saying thankyou! :) Appreciate you sharing!
elFlo
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Thanks for sharing this! Care to expand a bit on how you use the others indicators (Stoch, MACD, DMI, RSI) in conjunction with this particular system? Or are they simply here because this is the setup you generally use, without necessarily being a specific component of your cupping method?
DrewR
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They can/should be used in tandem. Using Stoch/RSI will definitely help with determining if a possible reversal is a trap or forthcoming due to oversold/overbought conditions; they are even more important if you do not rely heavily on SAR (or do not use it).
KCBitcoin
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This is my favourite technique so far. Thank you for your amazing work!
This is an alternative use of the cupping method (one that I personally use as SAR can be too much of a lagging indicator for me).
Look closely at the entry/exit prices.
If it is an exit warning, I'll set an exit price near or slightly *higher* than the warning.
If it is an entry warning, I'll set the price near or slightly *lower* than the warning.