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Three trendline rule on QMNM Kagi. Time to take some profits.
CEDC -- STRONG Kagi Chart. Vice stocks are wonderful.
Agreed. We'll see.
I think that one will start to be dumped on next week...IMO. :)
Agreed. Currently it's saying to hold, but I think we'll get lower shoulders to buy into.
Looks like a buy in .03 range
Hey SG,
I use Kagi for just the entry/exit points while I use Renko to time the orders. Kagi usually works a bit better than the traditional resist/support daytrades and has allowed me not to get seasick when holding stock for longer than planned. Otherwise, I use it for trend confirmation when the PPS chart doesn't quite tell me what I need.
GM Soapy...kinda figured one of you guys would be into Kagi as well...so I am not surprised to see you here.I like Kagi but I LOVE Renko(LOL)...In all seriousness tho the use of and understanding of both just might be a Dynamic Duo.BTW I was mark number 3 this morning...gotta keep an eye on you guys(LOL)
Thats some crazy looking stuff. I'll have to look into it ;)
BRLC 10 min, 0.5% reversal
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Brief Background on Kagi Charts
It is believed that the first kagi charts, and candlestick charts, were used around the time the Japanese stock market started trading in the 1870s. Candlestick chart expert Steve Nison introduced Kagi charts to the Western world when he published his book Beyond Candlesticks: New Japanese Charting Techniques Revealed, in 1994. Kagi charts, at first glance, look like swing charts. Like swing charts, they have no time axis and are made up of a series of vertical lines, however in the case of kagi charts, the vertical lines are based solely on the action of closing prices, not a bar's high and low prices. Another difference is that the thickness of a kagi chart line changes when closing prices penetrate the previous column top or bottom.
Kagi Chart Construction
Kagi assumes that the trader wishes to day trade or swing a security for profit while accepting a little loss as to ensure the bulk of the profit. All that means is that the trader/swinger enters just a bit after the trend establishes and leaves a bit earlier than the finalization of the trend; in essence, swinging with the momentum. Let us assume, that you as a trader/swinger, you are willing to lose out on 10% of the overall profit in the trade; 5% upon entering and 5% upon exiting. Thus you will retain 90% of the “pop” and that will be your profit. But what does that mean for the KAGI chart? Let's find out buy building one given the above scenario. In the above paragraph, we accepted a 5% loss on entry AND exit – call this 5% the “reversal amount”. This will be the loss you incur during a buy or sell signal on a Kagi chart while riding out the trade. To build the chart on this assumption will teach you how to read the chart and understand its signals.
First step in building the chart is to choose an initial closing price from the past; this price is called the “base price” at Day 1. Now follow these rules to start building the chart from the base price:
Usually the reversal amount is denotes as a percent of the PPS. If there is a 5% reversal on a 1 USD stock, the 5% reflects a 0.05 change in the PPS as to reverse the direction of the kagi line. If the reversal amount is large, it will help you to stay in a profitable trade longer, however you will lose a little more profit when you exit the trade. If the amount is small, you will lock in more profit when you exit the trade, however you are more likely to exit the trade prematurely.
Kagi charts look different from swing charts in that they have thick and thin vertical lines. To draw the line thickness correctly, we do the following:
Kagi Chart Interpretation
Kagi charts are an excellent way of viewing the underlying supply and demand of a market. A thick green line indicates that demand is exceeding supply (accumulation) during an upward trend. A thin red line indicates supply is exceeding demand (distribution) during a downward trend. When such lines alternate, the security is “boxed” into a price range and indicates channel trading.
Kagi charts are of great value to a trader of trending markets. Traders can use kagi charts for their entry and exit signals, and to place their stop-loss orders to lock in profits. They would consider buying a stock when the line changes from thin to thick. They would consider selling the stock when the line changes from thick to thin. I say 'consider' because a trader with a proven trading methodology would also consider factors such as the market phase, the relative strength of the stock and the strength of the stock's trend, in order to maximize profits while minimizing risk. More experienced traders can use a smaller reversal percentage when entering a trade, then when the trade is in profit, change this to a larger percentage. Should the stock commence an almost vertical climb, called a blow-off top, a smaller reversal percentage can be used to help lock in profits. As a general rule, when a Kagi chart has made eight to ten higher highs, the market is considered to be due for a correction.
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