An astute reader caught my mistake in yesterday’s email on dojiness, where I said I would be sharing two column ideas, but only mentioned one. (Good catch! See – I never use AI for these messages. Note the text in the footer below.)
The second column I like to use as a pair with Dojiness is Close Position.
If you aren’t familiar with the dojiness concept, go back and read yesterday’s email.
When you think about it, you’ll notice that dojiness describes just part of the full picture of a candle.
A candle could be a perfect doji, but it could open and close anywhere in its range.
That’s where the Close Position comes in.
The formula is similar to Dojiness:
Close Position = (Close - Low) / (High - Low)
The value ranges from 0 to 1, where 0 means the candle closed exactly at the low and 1 means it closed exactly at the high.
I use this column in all sorts of situations, especially the ones I listed yesterday for Dojiness:
- Applied to yesterday’s daily candle in an intraday strategy
- Applied to the most recent candle before your trading signal
- Applied to today’s opening range candle
- Applied to recent daily action
The other situation where I’ll often use this is the position of the entry price of a trade in today’s range.
Some of you might be thinking:
“Candlestick patterns? Those are complete gobbledygook. There’s no edge when a candle makes a doji.”
And you’re right – that alone won’t make a strategy, but it also completely misses the point.
More on that next week.
-Dave
P.S. HOLIDAY ALERT – a week from today is July 4th, and the market is closed. Plan something fun for the long weekend!
