February 2005

Bar Chart The standard bar chart draws a vertical line between the High and the Low.  The Open price is shown with a hash mark on the left side of the line.  The Close price is shown with a hash mark on the right side of the line.
Candlesticks A candlestick shows the same Open, High, Low and Close information as the standard bar.  A rectangle (candle body) is drawn between the Open and the Close.   Since the left side / right side relationship has been lost, the type of rectangle used indicates the Open and the Close. A solid candle body is drawn for a Down Candle when the Close is below the Open.  Therefore, the Open is at the top and the Close is at the bottom. A hollow candle body is drawn for an Up Candle when the Close is above the Open.  Therefore, the Open is at the bottom and the Close is at the top.
Framed Candles This variation of a standard candlestick outlines the candle with a frame.   The Down Candle bodies (solid) are colored.  The Up Candle bodies are hollow.
Solid Up Candles This variation of a Framed Candles draws the Up Candles with a solid body instead of a hollow body.   One color is used for every Down Candle, and a different color is used for every Up Candle. The Close price is at the bottom of a Red candle body, and at the top of a Green candle body.  The Open price is on the opposite end of the candle body from the Close price.
Color Bars Standard bars can be drawn using color to indicate bar relationships,  study relationships, trends and alert conditions. This example uses 4 colors to show these Dunnigan Bar relationships:      - Up bars are shown in green.      - Down bars are shown in red.      - Inside range bars are shown in blue.      - Outside range bars are shown in black.
Color Candlesticks Candlesticks can also be drawn using color.  This is the same Dunnigan Bars example as the previous Color Bars example. Both the frame and the body must be colored.  This is because the Open and Close relationship is indicated by the candle body being solid or hollow.
Ensign Corners™ Ensign has introduced 4 new candle types so that the candle bodies can be solid and colored with any color.  This eliminates the Open/Close relationship information because there are no hollow candle bodies to indicate when the Close is above the Open.  Therefore, variations on the candle frame are used to indicate the Open and the Close. Ensign Corners™ is a blend of a standard bar and a candlestick.  The Open is shown with a hash mark on the left side of the candle body.  The Close is shown with a hash mark on the right side of the candle body.
Ensign Zebras™ This variation draws a diagonal line across the candle body from the Open on the left side to the Close on the right side.  The diagonal line is a quick visual indication of whether the candle is a Down Candle or an Up Candle. Since the candle bodies look like forward or backward Z's, the name for this Z-bars presentation format is Ensign Zebras™.
Ensign Rockets™ This variation uses a different line thickness for the candle wicks and one edge of the candle body frame. This presentation format is called Ensign Rockets™. The wick and body edge on the Open side of the candle body are drawn with a thicker line.  This is the thrust side of the Ensign Rocket. The Close side of the candle body is the Rocket nose, and shows the direction the Rocket is headed.
Ensign Flutes™ The final variation draws a rectangle from the High to the Low instead of from the Open to the Close.   Like a standard bar, the Open price is shown with a hash mark on the left side.  The Close price is shown with a hash mark on the right side. This presentation format is called Ensign Flutes™.

Ensign Software is excited to announce this new innovation in Ensign Windows.   These new candle types permit Color Bar studies to color the candle bodies with any color, yet retain the Open/Close information in the candle frames.  Ensign Windows users need to upgrade to the Beta release.   Open a chart.  Use menu Charts | Types to select one of the new candle types, or press CTRL-P to show the chart property form and select the candle type on the Chart Type drop down list.   Enjoy!

Feedback:

'Just a quick note as the trading day progresses.  I have to say I was a little worried when you brought out the new candlestick types.  As usual you were right.  Brilliant is the word that comes to mind.  I am using the Ensign Rockets this morning.  I am up 18 points in the Russell using these bars alone.  See attached chart.  I am ignoring the other indicators generally.  I look for the thrusters to be on the bottom for a long and then look at the 2997 Volume chart for a confirmation of entry.  If there is no arrow on the 2997 I refuse the R1290 entry.  So far today six trades, four winners for the aforementioned 18 points on two contracts.  I can go play golf now!   I added an arrow and the word “Chop” to the chart.  When there are no fat wicks and tails to the bars it seems to indicate chop.  That’s a wonderful chop indicator if it works out.  Thank you for your continued outstanding work in our behalf.'  -J. West  02-17-2004  (charts shown with J.'s permission)

Line A detects the Doji formation, where the Close price equals the Open price, and labels this candle with the letter D.

Line B detects the Hammer formation, where Close and Open are in the upper part of the range.  Body is colored magenta.

Line C detects the Gravestone formation, where Close and Open are in the lower part of the range.  Body is colored yellow.

Line D detects a strong up move.  Close and Open are in the outer extremes of the candle range.  Body is colored green.

Line E detects a strong down move.  Close and Open are in the outer extremes of the candle range.  Body is colored red.

Line F detects a Spinner formation, where both Close and Open are in the middle of the range.  Body is colored cyan.

The Number field values control the # percentages for the tests, and can be adjusted to suit your personal preferences.

This example is available as the CandleRecognition template which can be downloaded from Ensign's web site using the Internet Services form.

If you are serious about trying to become a successful full time trader, I offer these comments.  If not, stop reading.  It will be a waste of your time.

It takes a special mental intelligence and ability, as well as a burning desire, and personal discipline to become a successful trader.  You can have the best trading template, software, and platform in the world and still may not be successful.  Why is that?   It is almost always the temperament and control of your emotions that determines your destiny.  Everyone needs to work on and improve/change this personal situation to eventually become what they want to be in trading.  Trading discipline is born from emotional control.  Usually traders are their own worst enemy.  That, coupled with their trading environment that is.  Trading environment is critical to success, but not as critical as the control of one’s emotions.  You must gain control to be successful.  There is no substitute for this control.  Nothing you can do to offset this deficiency will help.  How do you know if you are “out of control”?  Trading the “money” is probably the most universal tip off that you are out of emotional control.  The lack of ability to stop trading when you are losing is also a good indicator.

How do you control emotions?  Simply by trying to develop patience and making your focus the system and not the end results of your trading actions.  Stay immersed in the present.  In other words, stay immersed in the process of trading.  Reading the charts, the indicators, the momentum or lack of it in the market.  That’s the way you communicate with the market and overcome emotional urges.  Do not try to outguess the market.  Stay away from “outcomes” or as I call it “what if” thinking because that destroys your objectivity and focus on what’s important and creates negative thought processes.  If a golfer focuses on whether or not he will make a three foot putt and the consequences of missing it instead of the process involved in making the stroke required to have a successful outcome he will surely miss that putt.  He places a huge monkey on his back by worrying about the consequences of making or missing that putt.  Especially if there is pressure to make the putt such as a double or nothing bet, carrying his share of the load in a two man team event etc.  The same thing happens in trading except that there is usually much more pressure associated with that activity.  It can be almost a life and death situation if you allow it to become that.  This “outcomes” or “what if” thinking causes you to lose your focus on the really important things that will help you be successful.  What’s important is the step by step process of trading.  It really is as simple as that.  At least it was for me.  Once I gained that perspective on approaching the market, I had the control I needed and things started to get better.  Just remember the only thing you can control in trading the market is how you react to the things you are seeing.  Control of your emotions is critical in reacting in the correct manner to what you are seeing.

Let’s get personal here.  I had a non supportive family (my wife hated me trading), a small account, and a lot of un-success to overcome when I started trading.  Sound familiar?  The only way I got out of it was to develop a resolve that I would be successful and disprove all the nay Sayers, no matter what.  More importantly, I decided that I would gain a patient attitude and “slow things down” in my trading world. I adopted this concept of “slowing things down” from statements I saw from highly successful professional athletes and some teaching principles I used in teaching Leadership in Army service schools.  When Pro golfers, Pro basketball players, and interestingly enough NASCAR drivers are being highly successful, it is like everything slows down and it becomes easy to see what to do and how to do it.  Under the tremendous stress of combat, the same thing occurs when a leader is operating properly.  It is like everything is in slow motion.  With this concept in mind, I picked the AB to trade because it seemed to move slower than the NQ or ES.  I tried to select methods and time frames (R100 and R75) that were slower paced in terms of signals.  That would slow things down for me and allow me to gain control of my emotions and decision making processes.  I got lucky.  I found a great chat room where a man named Woodie showed me the way to remain calm in the face of adversity and that “a better trade was surely coming”.  I also found a great software company called Ensign Software and was able to develop some fairly good templates that supported those goals.  The main thing I did however was to make a conscious decision to grab my emotions by the throat and control them.  I wanted to be in control of me.  Simple as that. I would refuse to let anything or anyone deter me from that basic goal.  It has worked, but every day is a new struggle to accomplish it.  But once it has been done, the confidence is there that helps you do it over and over again.  It never goes away, this quiet panic that most traders live with.  You just learn how to control it.  Do this one thing and it will be easier to gain the success you crave.

So what does this chart show and how did Frank do that?

Weekly & Monthly:   On the left side of the chart are support and resistance levels based on the prior week's High, Low and Close and the prior month's High, Low and Close.   Support and resistance levels are standard formulas based on three prices.

Section Panels:  Below the chart are 5 panels showing various key values.  The first section in gray is showing the High/Low range of the opening 60 minute time period.  These two levels are marked on the chart with the H and L letters.

The 2nd section in blue is showing Today's Open price and Yesterday's Close price.  Today's Open price is shown with a thick black horizontal line.

The 3rd section in lighter blue is showing the Weekly Pivot, Weekly High, and Weekly Low prices for the prior week.  The pivot price is the average of the High, Low and Close.     Example:   (1178.00+1164.25+1174.75) / 3  =  1172.33

The 4th section in purple is showing the Monthly Pivot, Monthly High, and Monthly Low prices for the prior month.

The 5th section in yellow is showing Yesterday's Upper Value Area price, Point of Control, and Lower Value Area price.  These values are obtained from a price histogram study.

Support & Resistance:  S&R lines for today based on the opening 60 minute range are being plotted as the white, blue, green and red stair-stepped lines.   Click this link for information on setting up these Dynamic Support and Resistance lines.

Daily Prices:  A Daily Price Lines tool is showing horizontal lines at key levels such as YH = Yesterday's High, P = Yesterday's Pivot, YL = Yesterday's Low, H = Today's High, and L = Today's Low.

A workspace and a template for this set-up can be downloaded from the Ensign web site using the Internet Services form.   The workspace file is named Discovery and the template file is named Discovery.

The workspace will open Weekly, Monthly, 30-minute, and 3-minute charts.  The charts need to be refreshed.

The price histogram study on the 30-minute chart stores its values in global variables so they are available for use with other charts.  If you want to read 30 minute histogram values on volume charts, copy the Design Your Own (DYO) study from the histogram template to another tab in DYO.   Then open a volume chart and add a DYO from those tabs to that chart.  Refresh the histogram chart, then refresh the volume chart.   The histogram UVA, POC, and LVA values should be there.  Alter section or line styles to your taste.

Once set up, you can save a Weekly template, Monthly template, and a Histogram template from those 3 charts.  Also save a template from the master chart which is the chart where you read all values and have all the lines.   Then open those chart timeframes in any workspace you want and apply the weekly, monthly and histogram templates you saved.   Finally, apply the master template you saved from your volume chart or 3 minute chart to a time frame chart of your choice.  Refresh all charts, and it should then be in your trading workspace.   Save your workspace.    Make duplicate workspace somewhere.

All this would not be possible without the splendid powerful tools Ensign Windows makes available to their subscribers.

To learn more about this type of a chart, and how the various items shown are of value in trading, please go to the B-Line chat room and join in the discussion.   Hundreds of traders patronize this chat room to talk shop, share ideas, discuss methods, and help each other create charts like the one shown above.   If you need more information about the chat room, click this link.