I have believed for many years that the scans that you design are very personal, based on how you see the charts and like to trade or invest in the market. A friend who is a successful trader gave me a series of scans early in my trading career. They worked great for him, but I did not have much success with them at first. However, these scans did get me thinking about the trades that I like to make and encouraged me to create my own scans.
Some of my scans are looking for candle patterns and I select specific scans based on the current market conditions. Most of my trades use candle patterns as a trigger, so they are extremely important in my trading. Remember that all scans are just to give you trading candidates. Each chart has must be analyzed to determine if it warrants consideration for a trade (See my recent article on 7 candlestick patterns every trader should know).
You can also write the non-candle patterns scans for the trades you usually like to take. You will always be paying attention to all the candle patterns with every chart you review from these scans, but you can scan for other situations, as well. For example, I like to scan for stocks breaking out of a consolidation. You can write a scan for the volume levels, how long of a consolidation and any other condition that you like, and you will have candidates to look at most of the time. I will give you examples of a break of a consolidation scan in tomorrow’s chart of the day.
New to candlestick charts? Check out Steve’s FREE video introduction on Candlestick Charting here.
All you need is an idea and some basic knowledge of writing the scans. Most platforms have support groups that will assist you in creating the scans. Then you spend some time back testing the results and modifying the scan until it meets your expectation, or in some cases you just scrap it because it does not give you the results that you are looking for. You’ll then need to consider another idea and start all over again. You can also take other people’s ideas and alter the scan until it meets your style. In my opinion, it does not work to use another trader’s strategy. Explore your own ideas and you’ll be surprised at how many successful trades come your way.
Steve Nison is with Candlecharts.com – Candlestick Chart Training the Right Way.