Thread: ENTRY/EXIT - Morning Star/Evening Star Candlestick Formations

Some of the most popular trading strategies in forex markets involve the use of Japanese Candlestick charts. Given a specific pattern in candlestick formations, traders look to buy and sell currencies in anticipation of reversal or continuations in price. Yet testing the profitability of such concepts is easier said than done. We will attempt to quantitatively identify specific candlestick patterns and view historical performance of trading on said candlestick signals.

Forex Candlestick Morning Star and Evening Star Strategy

Entry Rule: If there is an Evening Star formation (as defined by our strategy code), we place a market order to go short on the open of the next daily bar. If there is a Morning Star, we place a market order to buy on the next bar.

Stop Loss: None

Take Profit: None

Exit Rule: The trade is taken out by the opposite signal. Thus if we are long due to a Morning Star formation, a subsequent Evening Star would close the existing long and establish a short position.


Download and unzip the attached .zip file. Open Morning_Evening.fxd and click “OK” when prompted on whether you would like to import the Strategy Advisor into your platform.

Subsequently open the Morning_Evening.fxw file to load the workspace that will load the strategy onto the British Pound/US Dollar and Euro/US Dollar currency pairs.

View the full article here: Forex @ DailyFX - Forex Strategy Corner: Using Candlestick Formations in Trading

Thanks for the morning star/ evening star strategy...
I would like to make some changes on this strategy could you kindly help with the program.

Chart Time frame: 30 mins.
Entry Order: Enter 2 trades.
Profit Targets: target 1 - 50Pips, Target 2 - 100Pips.
Stop Loss: (Close above or below the star candle (for both position))


Thanks.

The attached strategy will open two positions and manage different limits for each of them. You'll need to set those limits though in the input fields, where 10 = 10 pips. I didn't exactly understand how you wanted to manage your stops, so it hasn't been changed from the original strategy posted by David.

-jd

Thank you so much for the effective response... About the Stop Loss, my idea is to execute stop when market goes against and close above (for Short Entry) or below (for Long Entry) the middle candle.

BUY Example
At opening of order no stop loss is place but we need to monitor the middle candle of the morning star. If the market goes against our entry, the first candle that close below the middle candle should trigger stop.

Opposite goes for Sell entry.


Thanks.