In this section, I'm going to tell you how you can identify high probability bullish candlestick setups.
Our aim is to make high probability trades.
What do you mean by high probability trades?
See, in market at any point of time you make any trade, say, for example, you make a buyer trade
without doing any analysis, there will be approximately 50 percent chances of being profitable, isn't
it?
You make a random trade, buy in trade, you'll find out that in some cases you are winning and in 50
percent cases you are losing.
So our aim of doing candlestick analysis is to increase that probability of winning.
So we are trying to increase our purity maybe 70 percent or 80 percent so that we can earn consistent
money in the market.
So that is the whole aim of doing this exercise.
So our aim is to identify higher probability set ups that that are going to give us more winners and
losers.
How you can find them have given some hints in previous sections as well.
But here we are going to see all those filters that you can apply while identifying high probability
setups.
Let's see them one by one.
So here you can use four filters to get high probability to your previous filters that I have told you
that is market should be falling.
Second risk reward.
And third, as I told you, the next can and should open green.
But apart from that, there are few more filters that you can use to increase your probability.
Even if you don't use these filters, you you can still have high approval rates if you follow what
I just told you.
But yes, if you use this, it will increase you property maybe 10 to 15 percent more.
So what are those filters?
First, filter volume.
Second, this trend line that is a risk to warrant for this support and resistance.
You see this one by one.
Let's see the first filter.
What is first filter, which is the risk reward ratio?
As I told you, that you should have at least one to one risk reward.
If it is above this, then it's welcome.
But if risk is one and the world is less than one, then you should not go for this.
So you have to apply this filter before making any trade.
So you are to find out what the what is the risk and reward on that particular trade.
If it is at least one is to one, then you should go for it.
So we have to calculate the risk, as I told you, that you have to calculate it on the basis of it
to calculate reward on the basis of resistance.
It should be minimum one as to one.
The second filter that you can use is.
Volume.
Now, what is what do you mean by volume, volume indicates how many shares are traded on that particular
day.
Simply speaking, some more number of shares are traded, the more convincing that pattern will be presented.
So say, for example, you have a hammer pattern that is getting formed with high volume.
Isn't it more convincing?
So here, I would like to show here the price as well as volume so you can see volume on the bottom
and this is the price.
So this particular bar indicates volume on this particular day, so you can see, for example, this
was a big scandal and you can see the volume, you can see a huge volume followed by long scandal,
isn't it?
So if this happened, this is more convincing.
So what I mean to say bit volume is this one.
We have got our hammer in this case one.
This is Luke.
We can use this filter, we can find out what is the volume in this particular case, so you can see
the volume is higher than you can see previous three or four candidates, you can see this volume is
this one, the volume of this Cantley, this.
And in this case, this is what the volume is.
But if you consider this one, you can see this volume is higher than the previous three.
So what what metric should we use?
We should idealist's speaking.
We should trade those patterns where volume is at least 50 percent more than average volume of last
three trades.
So what do you mean by this?
Say, for example, on this particular day, your volume is, say, for example, one zero.
OK, so this is your a year and calculate last three days.
Say, for example, on previous day the volume was a Tilak on previous to that it was a positive Tilak
and previous to that it was for Telek.
We are to find out the average of these three 40 plus 50 plus 80.
So it is 170 divided by three, but it is almost to 60 something.
So that is what you get the volume for in this case, this volume is much more higher than 60 like so
I didn't speak.
It should be 50 percent more.
So what is the 50 percent of 60?
You are 50 percent.
That is 30.
It should be 96.
OK, so 90 like in this case, it is once a year.
So we can go for this many times.
You don't need to do this calculation.
You will mostly find find out by the graphical representation.
Say, for example, this one you can see such high volume.
And you know that this volume is much higher than the previous three days volume, so you don't need
to even do the calculation.
You can just do it manually here.
Also, you can see such high volume and you can quickly make out that as compared to last three days
volume, the volume is don't just go on the numbers.
Even if I have told 50 percent if what if it is forty nine point five percent, go for it.
No problem.
But it should be what it should be more than the previous volume that that is the logic behind this.
What I'm trying to tell you is that the volume should be good on that particular candle.
So if the scandal is supported by volume, then it's a good bye.
So this is the second filter that you can use.
That is volume.
Third filter that you can use is filter with support and resistance.
Look at this line.
This line is acting as support as well as resistance when the parade is coming to this level, it is
returning again.
It has come to this level.
It is returning here also more broadly to discount to this level and return here also in return for
this level is acting as a resistance which will get broken.
In this case, it got broken.
It became support for this was support.
This was support.
And when support is broken, it again became resistance.
So support and resistance game is getting played in this particular storm.
So in our case, when this hammer is formed, this hammer got formed near the support that this got
formed near this support.
So it is another indication that the market can go up because this is the level which is acting as the
support, which is preventing prices to front from going down from this level.
So this is another indication that can help you to further their careers.
So these are the few price points at which prices have reversed.
And this is the price point, which is not only a hammer, but not only hammer also came with good volume,
also came in falling market, and it is a near support.
So that is what we are doing.
We are trying to increase the probability of winning.
So this is how we have to free trade using support and resistance.
So this is how you can use support and resistance.
We use resistance when we talk about bearish patterns, when we talk about bullish patterns, we are
concerned about this.
Support and praise are coming to this level.
It is taking support and going up, coming to this level support and going up.
So this is how you can use support and resistance to filter out the trade.
So this is one way of putting it.
And last filter that you have is trend line.
The trend line is nothing but a line which indicates the trend or the direction of the trade.
So that is a line when at which when market comes, it reverses and it follows the trend you can see.
This is the point where the market reversed.
This was an uptrend market reversed.
And again, market came to this trend line and reversed.
So in our case, this hammer is getting formed.
You did not only near support, but also near the train line.
So it is, you can say, a golden point where you have so many things getting converged at one point
of time, so this will give us a high approval rate.
And you can see in this case that it gave a very sharp rally and it worked.
So this is how you can filter out the trades using this reward volume, support, resistance and train
lines to sum up everything.
In this case, you have first thing that is hammer.
Second, it has come in falling market for the next scandal is bullish one, fourth it is come volume.
Fifth risk reward is favorable.
6TH, it is near the airport and seven.
There are that it is near trend line, so you have seven things that are indicating you to buy them,
there is no point in waiting.
You should quickly buy such stocks and you should you can take benefit of this.
But there is a slight piece of advice that I would like to give you.
Even though these are the filters that you can use, it is not necessary that all the filters should
must be present to make the trade.
It's okay if this trend line indicator filter is not supporting, it's OK if it is not near resistance.
So do not try to make the trade perfect one.
If you try to do that, you you may not get many of the trades and that that that may not work in the
long run.
Even if to filters are not there, then it's okay.
It is important to put the trades if even if a few filters are working.
But yes, don't put trade unless and until recently.
It is not a feeling unless and until the market is not opening bullish to the scandal.
So that that is what you have to understand.
So volume trendlines and supports this to be are additional filters that can be used.
If they are there then that's very good.
But if they are not there, that does not mean that the trade will not work.
It will work.
But if the three are there, then it will have high probability.
That is what I want to tell you.