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Candlesticks are like any other tools. They have a high probability of predicting the future price but two people may see two different patterns and draw opposite conclusions..


I don't believe there are any technical indicators that have a "high probability of predicting the future"......the future cannot be predicted.

For me, candlesticks are easier to "read" as far as presenting a visual interpretation of the tug of war between buyers and sellers, and while there are certain patterns that repeat themselves, the trick is to determine before the fact when those patterns will play out. .....like trying to predict the future....
 
The only indicator I am using is RSI. Simple to read and pretty accurate. Indicators work better for longer time frame. However most of them often lag. Indicators appear only after the damage has been done. Prices should be the most important factor when entering a trade. Not indicators.
 
As their name imply, indicators show a possible direction. I found out that MACD works well on an intraday basis. Particularly when a stock tanks MACD indicates when it is ready to rebound. Not a completely safe bet but I would say it is accurate 75% of the time.
 
Follow, could you be a little more specific on the use of the macd on an intraday bases. I'm curious on the time frame and trigger that would make your bias change. 75% is a big edge.
steve
? is it basis or bases??
 
Originally posted by Tech Analysis
There's absolutley no predictive value in technical analysis or indicators with the *possible* exception of fibonacci and elliot wave. You can guess at it but that's about all it is - a guess.

Candle patterns and TA in general tell you how to react to future price movements based on past ones: if this happens, do that, otherwise do this. A breaking of previous support, trendlines, pivots, MA's etc. But to say because a morning star has formed that prices will go up is nonsense. Every time a pattern works this time, it will fail at some point in the future. I've read Nison's candlestick book and it's mind-boggling all the possible patterns. Then in live trading you'll see what you think is a tower top and the next day the price runs up higher.

I've also found that the smaller the timeframe the less value in TA to begin with. 1-minute bars will do anything they want; 5,10,30 have more pattern recognition to them.


As for indicators, I don't use them at all. Haven't found a single one that's worth my screen space.

Just my 2/100th's of a buck.
More...

'sticks are superior to bar charts (for ME). if we are "trading people not stocks (oliver velez?)," then 'sticks are a good graphic representation of market psychology (for ME). i find it interesting when somebody says: xxxxxx doesnt work. what they probably mean is it (xxxxxxxxx) doesnt work for them, so then it doesnt work. the psychology of such as statment is quite interesting......

 
Originally posted by Tech Analysis
There's absolutley no predictive value in technical analysis or indicators...

Candle patterns and TA in general tell you how to react to future price movements based on past ones: if this happens, do that, otherwise do this. A breaking of previous support, trendlines, pivots, MA's etc. But to say because a morning star has formed that prices will go up is nonsense. Every time a pattern works this time, it will fail at some point in the future. I've read Nison's candlestick book and it's mind-boggling all the possible patterns. Then in live trading you'll see what you think is a tower top and the next day the price runs up higher.

I've also found that the smaller the timeframe the less value in TA to begin with. 1-minute bars will do anything they want; 5,10,30 have more pattern recognition to them.

As for indicators, I don't use them at all. Haven't found a single one that's worth my screen space.

Just my 2/100th's of a buck.
More...

I agree...NO technical indicator predicts the future.

I use them to only react to a trade signal that has a high probability (based on my trade setup rules which are different for each trade setup) of follow-through to my designated profit-targets.

By the way...Tower Tops are High Probability Bearish Reversal candlestick patterns...yet...are not very repetitive.

You'll probably have better results with the high probability candlestick patterns...such not discussed as such in Nison's Book "Japanes Candlestick Charting Techniques".

Also, Nison doesn't go into which is repetitive and which has a higher probability of follow-through in comparison to another candlestick signal.

Simply, at least to me...Nison book was strictly designed as a very very very basic overview and shouldn't be used for something more specific and beyond that.

Also...I use the following time intervals for my trading 1min, 3min, 15min, 45min and daily charts.

1min charts are very reliable via my personal trade setups.

Simply...via your trading methodology...1min charts are useless.

Via another traders methodology that's different from yours...1min charts may be a goldmine.

"There is no one way road to profits. Those that think their failure to use something profitably will be the failure for all others are greatly misinformed."

P.S. Most traders that use candlesticks...use it incorrectly or try to take a basic candlestick book and apply it to real market conditions.

Even worst...those doing candlestick analysis are doing it without confirmation from another form of technical analysis.

Some traders have discussed a few high probability and repetitive candlestick patterns here at ET...use the search button to find such posts.

NihabaAshi
 
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