Exactly. When you see the #2 point form then you can place a buy stop 1-2 ticks above #2 bar's high. As long as the low isn't taken out then you have a 1-2-3. If the low is taken out you can still trade this pattern (I trade it the same whether there is a HL or LL as long as the LL is a reversal bar).
The trick is to have your stop sitting there ahead of time. You're right, you can't wait for a confirmation. Jeff & I are selling our contracts to the late-comers who wanted more confirmation. And the true pro's are selling Jeff & I their contracts when we buy ours! hehe.. but getting in at the bottom is something only a pro can do, IMHO, because they're the ones turning the market.
These are easier to see in hindsight but if you just pull up a historical chart and go bar by bar hiding the future bars off the chart then you can practice seeing these as they form. It takes some practice and confidence to do it real time.
The following user says Thank You to cunparis for this post:
hi jeff. first of all, thank you. i followed your advice, stripped my chart, and was finally profitable after a long losing streak.
one question: what kind of paint bars do you use in post # 2192? i'm experimenting with the different types offered in the download section, but none of them seem to match the ones you're showing.
Can we all new traders here look at your word " presently" as an open door for future hope to get your mentorship? (And since you like to help, I am sure that it will not cost us a fee of more than a few ticks a day so it will be of a great value to us and you still trade your trades)
I am not an expert on sbs renko bars......I have just been observing them since I cannot seem to find any other way to educate myself. There was a thread on the forum where Roonius, the inventor of sbs, talked about them briefly. Perhaps you could direct any questions his way. I asked on that thread where I could learn more about sbs....but got no answer.
The thing renko bars do is allow extra ticks before making it a reversal bar. This will have the affect of smoothing out the data and absorbing all the little pullbacks that occur. Those little pullbacks will introduce noise into other bar types, but with renko it removes some of the noise.
There is a cost for this however: if you don't enter mid-bar, then you can have a bar with 3x the bar size. So if you trade a 10 sbs renko, and you enter on a reversal bar you will have a 30 tick stop (assuming you put your beyond a swing pivot). On a range bar you may still have a 30 tick stop but usually you can find a closer place to put a stop.
Sometimes the renko will "absorb" a 1-2-3 pattern or a little pullback.
I keep switching back and forth between renko & range. both have their pros & cons. nothing is perfect. so far for this method I prefer range bars. If you use indicators (i'm not) then they work better with renko.
I hope that helps. Most importantly, take the time to study historical charts and practice. Trial & error. There is no best choice, everything can work..
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